Correlation Between KraneShares Emerging and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both KraneShares Emerging 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 Emerging 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 Emerging Markets and KraneShares MSCI One, you can compare the effects of market volatilities on KraneShares Emerging 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 Emerging with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Emerging and KraneShares MSCI.
Diversification Opportunities for KraneShares Emerging and KraneShares MSCI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KraneShares and KraneShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Emerging Markets and KraneShares MSCI One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI One and KraneShares Emerging 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 Emerging Markets 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 One has no effect on the direction of KraneShares Emerging i.e., KraneShares Emerging and KraneShares MSCI go up and down completely randomly.
Pair Corralation between KraneShares Emerging and KraneShares MSCI
Given the investment horizon of 90 days KraneShares Emerging Markets is expected to generate 1.38 times more return on investment than KraneShares MSCI. However, KraneShares Emerging is 1.38 times more volatile than KraneShares MSCI One. It trades about 0.02 of its potential returns per unit of risk. KraneShares MSCI One is currently generating about 0.0 per unit of risk. If you would invest 1,514 in KraneShares Emerging Markets on August 29, 2024 and sell it today you would earn a total of 201.00 from holding KraneShares Emerging Markets or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.39% |
| Values | Daily Returns |
KraneShares Emerging Markets vs. KraneShares MSCI One
Performance |
| Timeline |
| KraneShares Emerging |
| KraneShares MSCI One |
KraneShares Emerging and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Emerging and KraneShares MSCI
The main advantage of trading using opposite KraneShares Emerging and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Emerging 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.The idea behind KraneShares Emerging Markets and KraneShares MSCI One pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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