Correlation Between IShares Treasury and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both IShares Treasury 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 Treasury 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 Treasury Bond and KraneShares CSI China, you can compare the effects of market volatilities on IShares Treasury 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 Treasury with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and KraneShares CSI.
Diversification Opportunities for IShares Treasury and KraneShares CSI
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and KraneShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond 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 Treasury 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 Treasury Bond 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 Treasury i.e., IShares Treasury and KraneShares CSI go up and down completely randomly.
Pair Corralation between IShares Treasury and KraneShares CSI
Assuming the 90 days trading horizon iShares Treasury Bond is expected to generate 0.43 times more return on investment than KraneShares CSI. However, iShares Treasury Bond is 2.33 times less risky than KraneShares CSI. It trades about -0.07 of its potential returns per unit of risk. KraneShares CSI China is currently generating about -0.06 per unit of risk. If you would invest 343.00 in iShares Treasury Bond on August 24, 2024 and sell it today you would lose (5.00) from holding iShares Treasury Bond or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Bond vs. KraneShares CSI China
Performance |
| Timeline |
| iShares Treasury Bond |
| KraneShares CSI China |
IShares Treasury and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and KraneShares CSI
The main advantage of trading using opposite IShares Treasury and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 Treasury vs. Leverage Shares 2x | IShares Treasury vs. WisdomTree Silver 3x | IShares Treasury vs. Leverage Shares 2x | IShares Treasury vs. WisdomTree SP 500 |
| KraneShares CSI vs. Leverage Shares 3x | KraneShares CSI vs. WisdomTree SP 500 | KraneShares CSI vs. WisdomTree Silver 3x | KraneShares CSI vs. Leverage Shares 3x |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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