Correlation Between ARK 21Shares and WisdomTree Yield

Can any of the company-specific risk be diversified away by investing in both ARK 21Shares and WisdomTree Yield 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 Yield 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 Yield Enhanced, you can compare the effects of market volatilities on ARK 21Shares and WisdomTree Yield 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 Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK 21Shares and WisdomTree Yield.

Diversification Opportunities for ARK 21Shares and WisdomTree Yield

-0.1

Correlation Coefficient

ARK 21Shares  WisdomTree Yield

Good diversification

The 3 months correlation between ARK and WisdomTree is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ARK 21Shares Active and WisdomTree Yield Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Yield Enhanced 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 Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Yield Enhanced has no effect on the direction of ARK 21Shares i.e., ARK 21Shares and WisdomTree Yield go up and down completely randomly.

Pair Corralation between ARK 21Shares and WisdomTree Yield

Given the investment horizon of 90 days ARK 21Shares Active is expected to under-perform the WisdomTree Yield. In addition to that, ARK 21Shares is 24.53 times more volatile than WisdomTree Yield Enhanced. It trades about -0.13 of its total potential returns per unit of risk. WisdomTree Yield Enhanced is currently generating about 0.17 per unit of volatility. If you would invest  4,677  in WisdomTree Yield Enhanced on February 3, 2025 and sell it today you would earn a total of  75.00  from holding WisdomTree Yield Enhanced or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

ARK 21Shares Active  vs.  WisdomTree Yield Enhanced

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 weak performance in the last few months, the Etf's forward-looking signals remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

WisdomTree Yield Enhanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Yield Enhanced are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WisdomTree Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARK 21Shares and WisdomTree Yield

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

The idea behind ARK 21Shares Active and WisdomTree Yield Enhanced 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 the FinTech Suite module to use AI to screen and filter profitable investment opportunities.