Correlation Between First Trust and KraneShares Asia
Can any of the company-specific risk be diversified away by investing in both First Trust and KraneShares Asia 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 First Trust and KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and KraneShares Asia Pacific, you can compare the effects of market volatilities on First Trust and KraneShares Asia 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 First Trust with a short position of KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and KraneShares Asia.
Diversification Opportunities for First Trust and KraneShares Asia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and KraneShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific and First Trust 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 First Trust SkyBridge are associated (or correlated) with KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of First Trust i.e., First Trust and KraneShares Asia go up and down completely randomly.
Pair Corralation between First Trust and KraneShares Asia
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 20.38 times more return on investment than KraneShares Asia. However, First Trust is 20.38 times more volatile than KraneShares Asia Pacific. It trades about 0.08 of its potential returns per unit of risk. KraneShares Asia Pacific is currently generating about 0.19 per unit of risk. If you would invest 760.00 in First Trust SkyBridge on September 12, 2024 and sell it today you would earn a total of 1,256 from holding First Trust SkyBridge or generate 165.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. KraneShares Asia Pacific
Performance |
| Timeline |
| First Trust SkyBridge |
| KraneShares Asia Pacific |
First Trust and KraneShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and KraneShares Asia
The main advantage of trading using opposite First Trust and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, KraneShares Asia 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 Asia will offset losses from the drop in KraneShares Asia's long position.| First Trust vs. Grayscale Bitcoin Trust | First Trust vs. Siren Nasdaq NexGen | First Trust vs. First Trust Indxx | First Trust vs. Bitwise Crypto Industry |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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