Correlation Between SPDR SP and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP China and KraneShares Trust , you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and KraneShares Trust.
Diversification Opportunities for SPDR SP and KraneShares Trust
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and KraneShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and SPDR SP 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 SPDR SP China 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 SPDR SP i.e., SPDR SP and KraneShares Trust go up and down completely randomly.
Pair Corralation between SPDR SP and KraneShares Trust
Considering the 90-day investment horizon SPDR SP China is expected to under-perform the KraneShares Trust. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP China is 1.05 times less risky than KraneShares Trust. The etf trades about -0.13 of its potential returns per unit of risk. The KraneShares Trust is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,356 in KraneShares Trust on October 25, 2024 and sell it today you would lose (88.00) from holding KraneShares Trust or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP China vs. KraneShares Trust
Performance |
| Timeline |
| SPDR SP China |
| KraneShares Trust |
SPDR SP and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and KraneShares Trust
The main advantage of trading using opposite SPDR SP and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. Invesco Golden Dragon | SPDR SP vs. iShares MSCI Hong | SPDR SP vs. iShares MSCI China | SPDR SP vs. iShares China Large Cap |
| KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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