Correlation Between FT Cboe and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both FT Cboe 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 FT Cboe and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and KraneShares Trust, you can compare the effects of market volatilities on FT Cboe 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 FT Cboe with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and KraneShares Trust.
Diversification Opportunities for FT Cboe and KraneShares Trust
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DNOV and KraneShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and FT Cboe 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 FT Cboe Vest 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 FT Cboe i.e., FT Cboe and KraneShares Trust go up and down completely randomly.
Pair Corralation between FT Cboe and KraneShares Trust
Given the investment horizon of 90 days FT Cboe Vest is expected to generate 1.06 times more return on investment than KraneShares Trust. However, FT Cboe is 1.06 times more volatile than KraneShares Trust. It trades about 0.11 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.1 per unit of risk. If you would invest 3,356 in FT Cboe Vest on August 23, 2024 and sell it today you would earn a total of 943.00 from holding FT Cboe Vest or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.32% |
| Values | Daily Returns |
FT Cboe Vest vs. KraneShares Trust
Performance |
| Timeline |
| FT Cboe Vest |
| KraneShares Trust |
FT Cboe and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Cboe and KraneShares Trust
The main advantage of trading using opposite FT Cboe and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe 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.| FT Cboe vs. Innovator ETFs Trust | FT Cboe vs. First Trust Cboe | FT Cboe vs. FT Cboe Vest | FT Cboe vs. Innovator SP 500 |
| KraneShares Trust vs. Innovator ETFs Trust | KraneShares Trust vs. First Trust Cboe | KraneShares Trust vs. FT Cboe Vest | KraneShares Trust vs. Innovator SP 500 |
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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