Correlation Between ARK Next and Grandeur Peak

Can any of the company-specific risk be diversified away by investing in both ARK Next and Grandeur Peak at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ARK Next and Grandeur Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK Next Generation and Grandeur Peak Stalwarts, you can compare the effects of market volatilities on ARK Next and Grandeur Peak and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ARK Next with a short position of Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Grandeur Peak.

Diversification Opportunities for ARK Next and Grandeur Peak

0.85

Correlation Coefficient

ARK Next  Grandeur Peak

Very poor diversification

The 3 months correlation between ARK and Grandeur is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Grandeur Peak Stalwarts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Stalwarts and ARK Next is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ARK Next Generation are associated (or correlated) with Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Stalwarts has no effect on the direction of ARK Next i.e., ARK Next and Grandeur Peak go up and down completely randomly.

Pair Corralation between ARK Next and Grandeur Peak

Given the investment horizon of 90 days ARK Next Generation is expected to under-perform the Grandeur Peak. In addition to that, ARK Next is 1.89 times more volatile than Grandeur Peak Stalwarts. It trades about -0.08 of its total potential returns per unit of risk. Grandeur Peak Stalwarts is currently generating about 0.09 per unit of volatility. If you would invest  1,831  in Grandeur Peak Stalwarts on March 4, 2024 and sell it today you would earn a total of  27.00  from holding Grandeur Peak Stalwarts or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

ARK Next Generation  vs.  Grandeur Peak Stalwarts

ARK Next Generation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARK Next Generation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's forward-looking signals remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Grandeur Peak Stalwarts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grandeur Peak Stalwarts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Grandeur Peak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ARK Next and Grandeur Peak

The main advantage of trading using opposite ARK Next and Grandeur Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, Grandeur Peak can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Grandeur Peak will offset losses from the drop in Grandeur Peak's long position.

The idea behind ARK Next Generation and Grandeur Peak Stalwarts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.