Correlation Between ETRACS Monthly and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly and KraneShares MSCI 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 ETRACS Monthly and KraneShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and KraneShares MSCI All, you can compare the effects of market volatilities on ETRACS Monthly and KraneShares MSCI 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 ETRACS Monthly with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and KraneShares MSCI.
Diversification Opportunities for ETRACS Monthly and KraneShares MSCI
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and KraneShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI All has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and KraneShares MSCI go up and down completely randomly.
Pair Corralation between ETRACS Monthly and KraneShares MSCI
Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 0.49 times more return on investment than KraneShares MSCI. However, ETRACS Monthly Pay is 2.03 times less risky than KraneShares MSCI. It trades about 0.21 of its potential returns per unit of risk. KraneShares MSCI All is currently generating about -0.1 per unit of risk. If you would invest 1,971 in ETRACS Monthly Pay on September 3, 2024 and sell it today you would earn a total of 89.00 from holding ETRACS Monthly Pay or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. KraneShares MSCI All
Performance |
| Timeline |
| ETRACS Monthly Pay |
| KraneShares MSCI All |
ETRACS Monthly and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and KraneShares MSCI
The main advantage of trading using opposite ETRACS Monthly and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly position performs unexpectedly, KraneShares MSCI 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 MSCI will offset losses from the drop in KraneShares MSCI's long position.| ETRACS Monthly vs. ETRACS Quarterly Pay | ETRACS Monthly vs. Simplify Volatility Premium | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. iShares Trust |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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