Correlation Between Global X and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and KraneShares Trust, you can compare the effects of market volatilities on Global X 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 Global X with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and KraneShares Trust.
Diversification Opportunities for Global X and KraneShares Trust
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and KraneShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Global X 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 Global X Funds 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 Global X i.e., Global X and KraneShares Trust go up and down completely randomly.
Pair Corralation between Global X and KraneShares Trust
Considering the 90-day investment horizon Global X is expected to generate 1.66 times less return on investment than KraneShares Trust. But when comparing it to its historical volatility, Global X Funds is 1.18 times less risky than KraneShares Trust. It trades about 0.06 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,656 in KraneShares Trust on November 18, 2024 and sell it today you would earn a total of 131.00 from holding KraneShares Trust or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. KraneShares Trust
Performance |
| Timeline |
| Global X Funds |
| KraneShares Trust |
Global X and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and KraneShares Trust
The main advantage of trading using opposite Global X and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. iShares Dividend and | Global X vs. Martin Currie Sustainable | Global X vs. VictoryShares THB Mid | Global X vs. Mast Global Battery |
| KraneShares Trust vs. iShares Dividend and | KraneShares Trust vs. Martin Currie Sustainable | KraneShares Trust vs. VictoryShares THB Mid | KraneShares Trust vs. Mast Global Battery |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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