Correlation Between KBUY and KBND
Can any of the company-specific risk be diversified away by investing in both KBUY and KBND 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 KBUY and KBND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBUY and KBND, you can compare the effects of market volatilities on KBUY and KBND 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 KBUY with a short position of KBND. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBUY and KBND.
Diversification Opportunities for KBUY and KBND
Very poor diversification
The 3 months correlation between KBUY and KBND is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KBUY and KBND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBND and KBUY 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 KBUY are associated (or correlated) with KBND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBND has no effect on the direction of KBUY i.e., KBUY and KBND go up and down completely randomly.
Pair Corralation between KBUY and KBND
If you would invest 3,069 in KBND on September 4, 2024 and sell it today you would earn a total of 0.00 from holding KBND or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBUY vs. KBND
Performance |
| Timeline |
| KBUY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| KBND |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KBUY and KBND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBUY and KBND
The main advantage of trading using opposite KBUY and KBND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBUY position performs unexpectedly, KBND 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 KBND will offset losses from the drop in KBND's long position.| KBUY vs. Franklin FTSE South | KBUY vs. Franklin FTSE Japan | KBUY vs. Franklin FTSE India | KBUY vs. Franklin FTSE Brazil |
| KBND vs. VanEck China Bond | KBND vs. KraneShares Asia Pacific | KBND vs. KraneShares MSCI All | KBND vs. First Trust Long |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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