Correlation Between ARK Space and IShares Global

Can any of the company-specific risk be diversified away by investing in both ARK Space and IShares Global 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 Space and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK Space Exploration and iShares Global Industrials, you can compare the effects of market volatilities on ARK Space and IShares Global 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 Space with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Space and IShares Global.

Diversification Opportunities for ARK Space and IShares Global

0.62

Correlation Coefficient

ARK Space  IShares Global

Poor diversification

The 3 months correlation between ARK and IShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ARK Space Exploration and iShares Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Indus and ARK Space 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 Space Exploration are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Indus has no effect on the direction of ARK Space i.e., ARK Space and IShares Global go up and down completely randomly.

Pair Corralation between ARK Space and IShares Global

Given the investment horizon of 90 days ARK Space is expected to generate 1.63 times less return on investment than IShares Global. In addition to that, ARK Space is 1.31 times more volatile than iShares Global Industrials. It trades about 0.05 of its total potential returns per unit of risk. iShares Global Industrials is currently generating about 0.12 per unit of volatility. If you would invest  14,285  in iShares Global Industrials on June 24, 2024 and sell it today you would earn a total of  329.00  from holding iShares Global Industrials or generate 2.3% return on investment over 90 days.

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

ARK Space Exploration  vs.  iShares Global Industrials

ARK Space Exploration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Space Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, ARK Space is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares Global Indus

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Industrials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with ARK Space and IShares Global

The main advantage of trading using opposite ARK Space and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Space position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.

The idea behind ARK Space Exploration and iShares Global Industrials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.