Correlation Between Capitol Series and ARK Innovation
Can any of the company-specific risk be diversified away by investing in both Capitol Series and ARK Innovation 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 Capitol Series and ARK Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Series Trust and ARK Innovation ETF, you can compare the effects of market volatilities on Capitol Series and ARK Innovation 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 Capitol Series with a short position of ARK Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and ARK Innovation.
Diversification Opportunities for Capitol Series and ARK Innovation
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Capitol and ARK is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF and Capitol Series 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 Capitol Series Trust are associated (or correlated) with ARK Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of Capitol Series i.e., Capitol Series and ARK Innovation go up and down completely randomly.
Pair Corralation between Capitol Series and ARK Innovation
Given the investment horizon of 90 days Capitol Series Trust is expected to generate 0.35 times more return on investment than ARK Innovation. However, Capitol Series Trust is 2.9 times less risky than ARK Innovation. It trades about -0.26 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about -0.39 per unit of risk. If you would invest 3,960 in Capitol Series Trust on January 20, 2024 and sell it today you would lose (130.00) from holding Capitol Series Trust or give up 3.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Capitol Series Trust vs. ARK Innovation ETF
Performance |
Timeline |
Capitol Series Trust |
ARK Innovation ETF |
Capitol Series and ARK Innovation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capitol Series and ARK Innovation
The main advantage of trading using opposite Capitol Series and ARK Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Series position performs unexpectedly, ARK Innovation 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 ARK Innovation will offset losses from the drop in ARK Innovation's long position.Capitol Series vs. Alpha Architect Quantitative | Capitol Series vs. Alpha Architect International | Capitol Series vs. Alpha Architect International | Capitol Series vs. Alpha Architect Quantitative |
ARK Innovation vs. Motley Fool Global | ARK Innovation vs. The RBB Fund | ARK Innovation vs. Aquagold International | ARK Innovation vs. Thrivent High Yield |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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