Correlation Between KraneShares California and KraneShares European
Can any of the company-specific risk be diversified away by investing in both KraneShares California and KraneShares European 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 California and KraneShares European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares California Carbon and KraneShares European Carbon, you can compare the effects of market volatilities on KraneShares California and KraneShares European 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 California with a short position of KraneShares European. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares California and KraneShares European.
Diversification Opportunities for KraneShares California and KraneShares European
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KraneShares and KraneShares is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares California Carbon and KraneShares European Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares European and KraneShares California 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 California Carbon are associated (or correlated) with KraneShares European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares European has no effect on the direction of KraneShares California i.e., KraneShares California and KraneShares European go up and down completely randomly.
Pair Corralation between KraneShares California and KraneShares European
Given the investment horizon of 90 days KraneShares California Carbon is expected to under-perform the KraneShares European. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares California Carbon is 1.12 times less risky than KraneShares European. The etf trades about -0.1 of its potential returns per unit of risk. The KraneShares European Carbon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,129 in KraneShares European Carbon on November 27, 2024 and sell it today you would earn a total of 78.00 from holding KraneShares European Carbon or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares California Carbon vs. KraneShares European Carbon
Performance |
| Timeline |
| KraneShares California |
| KraneShares European |
KraneShares California and KraneShares European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares California and KraneShares European
The main advantage of trading using opposite KraneShares California and KraneShares European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares California position performs unexpectedly, KraneShares European 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 European will offset losses from the drop in KraneShares European's long position.| KraneShares California vs. KraneShares European Carbon | KraneShares California vs. iPath Series B | KraneShares California vs. KraneShares Global Carbon |
| KraneShares European vs. KraneShares California Carbon | KraneShares European vs. KraneShares Global Carbon | KraneShares European vs. iPath Series B |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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