Correlation Between KraneShares European and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both KraneShares European and Barclays Capital 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 European and Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares European Carbon and Barclays Capital, you can compare the effects of market volatilities on KraneShares European and Barclays Capital 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 European with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares European and Barclays Capital.
Diversification Opportunities for KraneShares European and Barclays Capital
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between KraneShares and Barclays is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares European Carbon and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and KraneShares European 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 European Carbon are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of KraneShares European i.e., KraneShares European and Barclays Capital go up and down completely randomly.
Pair Corralation between KraneShares European and Barclays Capital
Given the investment horizon of 90 days KraneShares European Carbon is expected to under-perform the Barclays Capital. In addition to that, KraneShares European is 1.14 times more volatile than Barclays Capital. It trades about -0.02 of its total potential returns per unit of risk. Barclays Capital is currently generating about -0.02 per unit of volatility. If you would invest 8,734 in Barclays Capital on September 1, 2024 and sell it today you would lose (480.00) from holding Barclays Capital or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 24.18% |
| Values | Daily Returns |
KraneShares European Carbon vs. Barclays Capital
Performance |
| Timeline |
| KraneShares European |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KraneShares European and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares European and Barclays Capital
The main advantage of trading using opposite KraneShares European and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares European position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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