Correlation Between ARK 21Shares and WisdomTree SmallCap

Can any of the company-specific risk be diversified away by investing in both ARK 21Shares and WisdomTree SmallCap 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 21Shares and WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK 21Shares Active and WisdomTree SmallCap Earnings, you can compare the effects of market volatilities on ARK 21Shares and WisdomTree SmallCap 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 21Shares with a short position of WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK 21Shares and WisdomTree SmallCap.

Diversification Opportunities for ARK 21Shares and WisdomTree SmallCap

-0.68

Correlation Coefficient

ARK 21Shares  WisdomTree SmallCap

Excellent diversification

The 3 months correlation between ARK and WisdomTree is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ARK 21Shares Active and WisdomTree SmallCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and ARK 21Shares 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 21Shares Active are associated (or correlated) with WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of ARK 21Shares i.e., ARK 21Shares and WisdomTree SmallCap go up and down completely randomly.

Pair Corralation between ARK 21Shares and WisdomTree SmallCap

If you would invest  4,763  in WisdomTree SmallCap Earnings on May 3, 2025 and sell it today you would earn a total of  392.00  from holding WisdomTree SmallCap Earnings or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

ARK 21Shares Active  vs.  WisdomTree SmallCap Earnings

ARK 21Shares Active

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK 21Shares Active has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, ARK 21Shares is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree SmallCap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SmallCap Earnings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, WisdomTree SmallCap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ARK 21Shares and WisdomTree SmallCap

The main advantage of trading using opposite ARK 21Shares and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK 21Shares position performs unexpectedly, WisdomTree SmallCap 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 WisdomTree SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.

The idea behind ARK 21Shares Active and WisdomTree SmallCap Earnings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.