Correlation Between IShares MSCI and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and KraneShares MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Malaysia and KraneShares MSCI All, you can compare the effects of market volatilities on IShares MSCI and KraneShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and KraneShares MSCI.
Diversification Opportunities for IShares MSCI and KraneShares MSCI
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and KraneShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Malaysia and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All 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 Malaysia are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI All has no effect on the direction of IShares MSCI i.e., IShares MSCI and KraneShares MSCI go up and down completely randomly.
Pair Corralation between IShares MSCI and KraneShares MSCI
Considering the 90-day investment horizon iShares MSCI Malaysia is expected to generate 0.36 times more return on investment than KraneShares MSCI. However, iShares MSCI Malaysia is 2.77 times less risky than KraneShares MSCI. It trades about -0.13 of its potential returns per unit of risk. KraneShares MSCI All is currently generating about -0.17 per unit of risk. If you would invest 2,500 in iShares MSCI Malaysia on August 29, 2024 and sell it today you would lose (53.00) from holding iShares MSCI Malaysia or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Malaysia vs. KraneShares MSCI All
Performance |
| Timeline |
| iShares MSCI Malaysia |
| KraneShares MSCI All |
IShares MSCI and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and KraneShares MSCI
The main advantage of trading using opposite IShares MSCI and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, KraneShares MSCI 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 MSCI will offset losses from the drop in KraneShares MSCI's long position.| IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI Hong |
| KraneShares MSCI vs. iShares MSCI Singapore | KraneShares MSCI vs. iShares MSCI Malaysia | KraneShares MSCI vs. iShares MSCI Australia | KraneShares MSCI vs. iShares MSCI South |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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