Correlation Between Main Sector and ARK Next

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

By analyzing existing cross correlation between Main Sector Rotation and ARK Next Generation, you can compare the effects of market volatilities on Main Sector and ARK Next 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 Main Sector with a short position of ARK Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Sector and ARK Next.

Diversification Opportunities for Main Sector and ARK Next

0.34

Correlation Coefficient

Main Sector  ARK Next

Weak diversification

The 3 months correlation between Main and ARK is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Main Sector Rotation and ARK Next Generation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Next Generation and Main Sector 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 Main Sector Rotation are associated (or correlated) with ARK Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Next Generation has no effect on the direction of Main Sector i.e., Main Sector and ARK Next go up and down completely randomly.

Pair Corralation between Main Sector and ARK Next

Given the investment horizon of 90 days Main Sector Rotation is expected to generate 0.4 times more return on investment than ARK Next. However, Main Sector Rotation is 2.51 times less risky than ARK Next. It trades about 0.11 of its potential returns per unit of risk. ARK Next Generation is currently generating about 0.0 per unit of risk. If you would invest  6,078  in Main Sector Rotation on September 6, 2025 and sell it today you would earn a total of  353.00  from holding Main Sector Rotation or generate 5.81% return on investment over 90 days.

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

Main Sector Rotation  vs.  ARK Next Generation

Main Sector Rotation

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Main Sector Rotation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Main Sector is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ARK Next Generation

Risk-Adjusted Performance

Weakest

Over the last 90 days ARK Next Generation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, ARK Next is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Main Sector and ARK Next

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

The idea behind Main Sector Rotation and ARK Next Generation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.