Do you or anyone think Ancelotti would let Hansi Flick to beat him three times in a row in one season? Let what how this would unfold as it's difficult to think of anything right now.
For this season, Ancellotti has not been at the top level that he usually is. His team suffers a lot and gets dominated. Even the least successful teams in La Liga dominate Madrid and take over their midfield. This shows that the coaching of the team is not elite. What has kept Madrid alive is mainly the quality of the players they have, especially the attack.
When you watch Madrid against small teams, you'll understand what I mean. These teams create too many goal-scoring opportunities to hurt Madrid, but they lack the quality to make it happen while Madrid, on the other hand, has the quality to make use of their chances and they win the match. I'm not saying Ancelotti is a bad coach, but I just don't think he's been elite this season.
The same thing will happen against Arsenal. Arsenal will dominate, they will create all the chances but if they don't make use of their chances, Madrid will hurt them because they have so much quality up front.
So about the El classic finals, except Madrid turns up with a different pattern of play, I doubt they will win against Barcelona if everything remains constant (no red cards or penalties). Barcelona have the quality too and they know how to dominate.