Correlation Between First Trust and KraneShares
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and KraneShares, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and KraneShares.
Diversification Opportunities for First Trust and KraneShares
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and KraneShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and First Trust 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 First Trust Emerging 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 First Trust i.e., First Trust and KraneShares go up and down completely randomly.
Pair Corralation between First Trust and KraneShares
If you would invest 3,069 in KraneShares on November 1, 2024 and sell it today you would earn a total of 0.00 from holding KraneShares or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.67% |
| Values | Daily Returns |
First Trust Emerging vs. KraneShares
Performance |
| Timeline |
| First Trust Emerging |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and KraneShares
The main advantage of trading using opposite First Trust and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
| KraneShares vs. iShares JP Morgan | KraneShares vs. First Trust Emerging | KraneShares vs. VanEck China Bond | KraneShares vs. WisdomTree Emerging Currency |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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