Correlation Between Dimensional International and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Dimensional International 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 Dimensional International and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and KraneShares Trust, you can compare the effects of market volatilities on Dimensional International 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 Dimensional International with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and KraneShares Trust.
Diversification Opportunities for Dimensional International and KraneShares Trust
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and KraneShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Dimensional International 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 Dimensional International High 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 Dimensional International i.e., Dimensional International and KraneShares Trust go up and down completely randomly.
Pair Corralation between Dimensional International and KraneShares Trust
Given the investment horizon of 90 days Dimensional International High is expected to under-perform the KraneShares Trust. In addition to that, Dimensional International is 1.93 times more volatile than KraneShares Trust. It trades about -0.16 of its total potential returns per unit of risk. KraneShares Trust is currently generating about 0.23 per unit of volatility. If you would invest 2,545 in KraneShares Trust on August 26, 2024 and sell it today you would earn a total of 50.00 from holding KraneShares Trust or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International High vs. KraneShares Trust
Performance |
| Timeline |
| Dimensional International |
| KraneShares Trust |
Dimensional International and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and KraneShares Trust
The main advantage of trading using opposite Dimensional International and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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.The idea behind Dimensional International High and KraneShares Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| KraneShares Trust vs. FT Vest Equity | KraneShares Trust vs. Northern Lights | KraneShares Trust vs. Dimensional International High | KraneShares Trust vs. First Trust Exchange Traded |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |