Correlation Between Ark Innovation and AERGO

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

Diversification Opportunities for Ark Innovation and AERGO

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ark Innovation and AERGO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ark Innovation ETF and AERGO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AERGO and Ark Innovation 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 Innovation ETF are associated (or correlated) with AERGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AERGO has no effect on the direction of Ark Innovation i.e., Ark Innovation and AERGO go up and down completely randomly.

Pair Corralation between Ark Innovation and AERGO

Given the investment horizon of 90 days Ark Innovation ETF is expected to under-perform the AERGO. But the etf apears to be less risky and, when comparing its historical volatility, Ark Innovation ETF is 1.82 times less risky than AERGO. The etf trades about -0.06 of its potential returns per unit of risk. The AERGO is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  20.00  in AERGO on July 1, 2022 and sell it today you would lose (7.00)  from holding AERGO or give up 35.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.33%
ValuesDaily Returns

Ark Innovation ETF  vs.  AERGO

 Performance (%) 
       Timeline  
Ark Innovation ETF 
Ark Innovation Performance
0 of 100
Over the last 90 days Ark Innovation ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ark Innovation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Ark Innovation Price Channel

AERGO 
AERGO Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AERGO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, AERGO sustained solid returns over the last few months and may actually be approaching a breakup point.

AERGO Price Channel

Ark Innovation and AERGO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ark Innovation and AERGO

The main advantage of trading using opposite Ark Innovation and AERGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Innovation position performs unexpectedly, AERGO 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 AERGO will offset losses from the drop in AERGO's long position.
Ark Innovation vs. Globus Maritime Limi
The idea behind Ark Innovation ETF and AERGO 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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