Correlation Between IShares MSCI and KraneShares
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and KraneShares 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 IShares MSCI and KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI China and KraneShares, you can compare the effects of market volatilities on IShares MSCI and KraneShares 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 IShares MSCI with a short position of KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and KraneShares.
Diversification Opportunities for IShares MSCI and KraneShares
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and KraneShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and IShares MSCI 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 iShares MSCI China are associated (or correlated) with KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of IShares MSCI i.e., IShares MSCI and KraneShares go up and down completely randomly.
Pair Corralation between IShares MSCI and KraneShares
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.43 times less return on investment than KraneShares. But when comparing it to its historical volatility, iShares MSCI China is 1.08 times less risky than KraneShares. It trades about 0.0 of its potential returns per unit of risk. KraneShares is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,919 in KraneShares on September 3, 2024 and sell it today you would lose (23.00) from holding KraneShares or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
iShares MSCI China vs. KraneShares
Performance |
| Timeline |
| iShares MSCI China |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares MSCI and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and KraneShares
The main advantage of trading using opposite IShares MSCI and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, KraneShares 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 will offset losses from the drop in KraneShares' long position.| IShares MSCI vs. iShares MSCI China | IShares MSCI vs. KraneShares Bosera MSCI | IShares MSCI vs. WisdomTree China ex State Owned | IShares MSCI vs. iShares MSCI China |
| KraneShares vs. Franklin FTSE South | KraneShares vs. Franklin FTSE Japan | KraneShares vs. Franklin FTSE India | KraneShares vs. Franklin FTSE Brazil |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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