Correlation Between Capital Income and KraneShares Emerging
Can any of the company-specific risk be diversified away by investing in both Capital Income and KraneShares Emerging 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 Capital Income and KraneShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and KraneShares Emerging Markets, you can compare the effects of market volatilities on Capital Income and KraneShares Emerging 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 Capital Income with a short position of KraneShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and KraneShares Emerging.
Diversification Opportunities for Capital Income and KraneShares Emerging
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and KraneShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and KraneShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Emerging and Capital Income 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 Capital Income Builder are associated (or correlated) with KraneShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Emerging has no effect on the direction of Capital Income i.e., Capital Income and KraneShares Emerging go up and down completely randomly.
Pair Corralation between Capital Income and KraneShares Emerging
Assuming the 90 days horizon Capital Income is expected to generate 2.92 times less return on investment than KraneShares Emerging. But when comparing it to its historical volatility, Capital Income Builder is 2.7 times less risky than KraneShares Emerging. It trades about 0.26 of its potential returns per unit of risk. KraneShares Emerging Markets is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,645 in KraneShares Emerging Markets on November 3, 2024 and sell it today you would earn a total of 145.00 from holding KraneShares Emerging Markets or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. KraneShares Emerging Markets
Performance |
| Timeline |
| Capital Income Builder |
| KraneShares Emerging |
Capital Income and KraneShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and KraneShares Emerging
The main advantage of trading using opposite Capital Income and KraneShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, KraneShares Emerging 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 KraneShares Emerging will offset losses from the drop in KraneShares Emerging's long position.| Capital Income vs. Dws Global Macro | Capital Income vs. Rbb Fund | Capital Income vs. Kinetics Global Fund | Capital Income vs. Ms Global Fixed |
| KraneShares Emerging vs. KraneShares Bosera MSCI | KraneShares Emerging vs. KraneShares MSCI One | KraneShares Emerging vs. Cambria Value and | KraneShares Emerging vs. KraneShares MSCI All |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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