Correlation Between WisdomTree China and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and KraneShares Trust 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 WisdomTree China and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree China ex State Owned and KraneShares Trust , you can compare the effects of market volatilities on WisdomTree China and KraneShares Trust 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 WisdomTree China with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and KraneShares Trust.
Diversification Opportunities for WisdomTree China and KraneShares Trust
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and KraneShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and WisdomTree 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 WisdomTree China ex State Owned are associated (or correlated) with KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of WisdomTree China i.e., WisdomTree China and KraneShares Trust go up and down completely randomly.
Pair Corralation between WisdomTree China and KraneShares Trust
Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to generate 1.42 times more return on investment than KraneShares Trust. However, WisdomTree China is 1.42 times more volatile than KraneShares Trust . It trades about -0.1 of its potential returns per unit of risk. KraneShares Trust is currently generating about -0.18 per unit of risk. If you would invest 3,250 in WisdomTree China ex State Owned on August 30, 2024 and sell it today you would lose (189.00) from holding WisdomTree China ex State Owned or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WisdomTree China ex State Owne vs. KraneShares Trust
Performance |
| Timeline |
| WisdomTree China |
| KraneShares Trust |
WisdomTree China and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree China and KraneShares Trust
The main advantage of trading using opposite WisdomTree China and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, KraneShares Trust 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 Trust will offset losses from the drop in KraneShares Trust's long position.| WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
| KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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