Correlation Between Invesco China and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both Invesco China 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 Invesco China and KraneShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and KraneShares MSCI All, you can compare the effects of market volatilities on Invesco China 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 Invesco China with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and KraneShares MSCI.
Diversification Opportunities for Invesco China and KraneShares MSCI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and KraneShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology 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 Invesco China 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 Invesco China Technology 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 Invesco China i.e., Invesco China and KraneShares MSCI go up and down completely randomly.
Pair Corralation between Invesco China and KraneShares MSCI
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.22 times more return on investment than KraneShares MSCI. However, Invesco China is 1.22 times more volatile than KraneShares MSCI All. It trades about -0.09 of its potential returns per unit of risk. KraneShares MSCI All is currently generating about -0.14 per unit of risk. If you would invest 4,164 in Invesco China Technology on August 28, 2024 and sell it today you would lose (235.00) from holding Invesco China Technology or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. KraneShares MSCI All
Performance |
| Timeline |
| Invesco China Technology |
| KraneShares MSCI All |
Invesco China and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and KraneShares MSCI
The main advantage of trading using opposite Invesco China and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China 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.| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
| KraneShares MSCI vs. KraneShares MSCI China | KraneShares MSCI vs. Global X MSCI | KraneShares MSCI vs. KraneShares Bosera MSCI | KraneShares MSCI vs. KraneShares SSE STAR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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