Correlation Between WisdomTree Emerging and KraneShares
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and KraneShares 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 Emerging and KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Emerging Markets and KraneShares, you can compare the effects of market volatilities on WisdomTree Emerging and KraneShares 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 Emerging with a short position of KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and KraneShares.
Diversification Opportunities for WisdomTree Emerging and KraneShares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and KraneShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and KraneShares go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and KraneShares
Considering the 90-day investment horizon WisdomTree Emerging Markets is expected to generate 1.92 times more return on investment than KraneShares. However, WisdomTree Emerging is 1.92 times more volatile than KraneShares. It trades about 0.02 of its potential returns per unit of risk. KraneShares is currently generating about -0.16 per unit of risk. If you would invest 2,506 in WisdomTree Emerging Markets on August 27, 2024 and sell it today you would earn a total of 121.00 from holding WisdomTree Emerging Markets or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 13.99% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. KraneShares
Performance |
| Timeline |
| WisdomTree Emerging |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WisdomTree Emerging and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and KraneShares
The main advantage of trading using opposite WisdomTree Emerging and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, KraneShares 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 will offset losses from the drop in KraneShares' long position.| WisdomTree Emerging vs. VanEck JP Morgan | WisdomTree Emerging vs. Invesco Emerging Markets | WisdomTree Emerging vs. SPDR Bloomberg Emerging | WisdomTree Emerging vs. iShares JP Morgan |
| KraneShares vs. Invesco Emerging Markets | KraneShares vs. PIMCO 15 Year | KraneShares vs. iShares JP Morgan | KraneShares vs. WisdomTree Emerging Markets |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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