Correlation Between SPDR SP and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and KraneShares MSCI 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 MSCI All, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and KraneShares MSCI.
Diversification Opportunities for SPDR SP and KraneShares MSCI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and KraneShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China 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 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 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 SPDR SP i.e., SPDR SP and KraneShares MSCI go up and down completely randomly.
Pair Corralation between SPDR SP and KraneShares MSCI
Considering the 90-day investment horizon SPDR SP China is expected to under-perform the KraneShares MSCI. 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 MSCI. The etf trades about -0.17 of its potential returns per unit of risk. The KraneShares MSCI All is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,587 in KraneShares MSCI All on August 28, 2024 and sell it today you would lose (108.00) from holding KraneShares MSCI All or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP China vs. KraneShares MSCI All
Performance |
| Timeline |
| SPDR SP China |
| KraneShares MSCI All |
SPDR SP and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and KraneShares MSCI
The main advantage of trading using opposite SPDR SP and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| 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 MSCI vs. KraneShares MSCI China | KraneShares MSCI vs. Global X MSCI | KraneShares MSCI vs. KraneShares Bosera MSCI | KraneShares MSCI vs. KraneShares SSE STAR |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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