Correlation Between KraneShares Electric and First Trust
Can any of the company-specific risk be diversified away by investing in both KraneShares Electric and First 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 KraneShares Electric and First Trust 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 First Trust S Network, you can compare the effects of market volatilities on KraneShares Electric and First 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 KraneShares Electric with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Electric and First Trust.
Diversification Opportunities for KraneShares Electric and First Trust
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between KraneShares and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Electric Vehicles and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of KraneShares Electric i.e., KraneShares Electric and First Trust go up and down completely randomly.
Pair Corralation between KraneShares Electric and First Trust
Given the investment horizon of 90 days KraneShares Electric Vehicles is expected to under-perform the First Trust. In addition to that, KraneShares Electric is 1.23 times more volatile than First Trust S Network. It trades about -0.04 of its total potential returns per unit of risk. First Trust S Network is currently generating about 0.04 per unit of volatility. If you would invest 4,803 in First Trust S Network on November 2, 2024 and sell it today you would earn a total of 1,154 from holding First Trust S Network or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares Electric Vehicles vs. First Trust S Network
Performance |
| Timeline |
| KraneShares Electric |
| First Trust S |
KraneShares Electric and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Electric and First Trust
The main advantage of trading using opposite KraneShares Electric and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Electric position performs unexpectedly, First 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 First Trust will offset losses from the drop in First Trust's long position.| KraneShares Electric vs. SPDR SP Kensho | KraneShares Electric vs. iShares Self Driving EV | KraneShares Electric vs. Amplify Lithium Battery | KraneShares Electric vs. Global X Autonomous |
| First Trust vs. KraneShares Electric Vehicles | First Trust vs. First Trust Nasdaq | First Trust vs. VanEck Gaming ETF | First Trust vs. First Trust NASDAQ |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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