Correlation Between ARK and BeefyFinance

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Can any of the company-specific risk be diversified away by investing in both ARK and BeefyFinance 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 and BeefyFinance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK and BeefyFinance, you can compare the effects of market volatilities on ARK and BeefyFinance 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 with a short position of BeefyFinance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK and BeefyFinance.

Diversification Opportunities for ARK and BeefyFinance

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ARK and BeefyFinance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ARK and Beefy.Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeefyFinance and ARK 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 are associated (or correlated) with BeefyFinance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeefyFinance has no effect on the direction of ARK i.e., ARK and BeefyFinance go up and down completely randomly.

Pair Corralation between ARK and BeefyFinance

Assuming the 90 days trading horizon ARK is expected to under-perform the BeefyFinance. But the crypto coin apears to be less risky and, when comparing its historical volatility, ARK is 28.13 times less risky than BeefyFinance. The crypto coin trades about -0.16 of its potential returns per unit of risk. The BeefyFinance is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  131,227  in BeefyFinance on February 27, 2022 and sell it today you would lose (64,789)  from holding BeefyFinance or give up 49.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

ARK  vs.  Beefy.Finance

 Performance (%) 
      Timeline 
ARK 
ARK Performance
0 of 100
Over the last 90 days ARK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for ARK investors.

ARK Price Channel

BeefyFinance 
BeefyFinance Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BeefyFinance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, BeefyFinance sustained solid returns over the last few months and may actually be approaching a breakup point.

BeefyFinance Price Channel

ARK and BeefyFinance Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with ARK and BeefyFinance

The main advantage of trading using opposite ARK and BeefyFinance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK position performs unexpectedly, BeefyFinance 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 BeefyFinance will offset losses from the drop in BeefyFinance's long position.
The idea behind ARK and BeefyFinance 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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