Correlation Between KraneShares Electric and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both KraneShares Electric 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 KraneShares Electric and KraneShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Electric Vehicles and KraneShares MSCI China, you can compare the effects of market volatilities on KraneShares Electric 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 KraneShares Electric with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Electric and KraneShares MSCI.
Diversification Opportunities for KraneShares Electric and KraneShares MSCI
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KraneShares and KraneShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Electric Vehicles and KraneShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI China and KraneShares Electric 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 KraneShares Electric Vehicles 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 China has no effect on the direction of KraneShares Electric i.e., KraneShares Electric and KraneShares MSCI go up and down completely randomly.
Pair Corralation between KraneShares Electric and KraneShares MSCI
Assuming the 90 days trading horizon KraneShares Electric Vehicles is expected to generate 1.17 times more return on investment than KraneShares MSCI. However, KraneShares Electric is 1.17 times more volatile than KraneShares MSCI China. It trades about 0.01 of its potential returns per unit of risk. KraneShares MSCI China is currently generating about -0.11 per unit of risk. If you would invest 1,268 in KraneShares Electric Vehicles on August 30, 2024 and sell it today you would earn a total of 3.00 from holding KraneShares Electric Vehicles or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares Electric Vehicles vs. KraneShares MSCI China
Performance |
| Timeline |
| KraneShares Electric |
| KraneShares MSCI China |
KraneShares Electric and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Electric and KraneShares MSCI
The main advantage of trading using opposite KraneShares Electric and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Electric 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.| KraneShares Electric vs. Leverage Shares 3x | KraneShares Electric vs. GraniteShares 3x Short | KraneShares Electric vs. WisdomTree Natural Gas | KraneShares Electric vs. Leverage Shares 3x |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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