Correlation Between IShares MSCI and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and KraneShares CSI 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 IShares MSCI and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Hong and KraneShares CSI China, you can compare the effects of market volatilities on IShares MSCI and KraneShares CSI 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 IShares MSCI with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and KraneShares CSI.
Diversification Opportunities for IShares MSCI and KraneShares CSI
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and KraneShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Hong and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China and IShares MSCI 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 iShares MSCI Hong are associated (or correlated) with KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of IShares MSCI i.e., IShares MSCI and KraneShares CSI go up and down completely randomly.
Pair Corralation between IShares MSCI and KraneShares CSI
Considering the 90-day investment horizon iShares MSCI Hong is expected to generate 0.54 times more return on investment than KraneShares CSI. However, iShares MSCI Hong is 1.84 times less risky than KraneShares CSI. It trades about -0.08 of its potential returns per unit of risk. KraneShares CSI China is currently generating about -0.07 per unit of risk. If you would invest 1,787 in iShares MSCI Hong on September 1, 2024 and sell it today you would lose (43.00) from holding iShares MSCI Hong or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares MSCI Hong vs. KraneShares CSI China
Performance |
| Timeline |
| iShares MSCI Hong |
| KraneShares CSI China |
IShares MSCI and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and KraneShares CSI
The main advantage of trading using opposite IShares MSCI and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, KraneShares CSI 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 CSI will offset losses from the drop in KraneShares CSI's long position.| IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Malaysia | IShares MSCI vs. iShares MSCI Australia |
| KraneShares CSI vs. iShares MSCI China | KraneShares CSI vs. Invesco China Technology | KraneShares CSI vs. Xtrackers Harvest CSI | KraneShares CSI vs. iShares China Large Cap |
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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