Correlation Between KraneShares European and KraneShares Global
Can any of the company-specific risk be diversified away by investing in both KraneShares European and KraneShares Global 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 KraneShares Global 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 KraneShares Global Carbon, you can compare the effects of market volatilities on KraneShares European and KraneShares Global 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 KraneShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares European and KraneShares Global.
Diversification Opportunities for KraneShares European and KraneShares Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KraneShares and KraneShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares European Carbon and KraneShares Global Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Global Carbon 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 KraneShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Global Carbon has no effect on the direction of KraneShares European i.e., KraneShares European and KraneShares Global go up and down completely randomly.
Pair Corralation between KraneShares European and KraneShares Global
Given the investment horizon of 90 days KraneShares European Carbon is expected to under-perform the KraneShares Global. In addition to that, KraneShares European is 1.57 times more volatile than KraneShares Global Carbon. It trades about -0.02 of its total potential returns per unit of risk. KraneShares Global Carbon is currently generating about -0.02 per unit of volatility. If you would invest 3,590 in KraneShares Global Carbon on September 1, 2024 and sell it today you would lose (468.00) from holding KraneShares Global Carbon or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares European Carbon vs. KraneShares Global Carbon
Performance |
| Timeline |
| KraneShares European |
| KraneShares Global Carbon |
KraneShares European and KraneShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares European and KraneShares Global
The main advantage of trading using opposite KraneShares European and KraneShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares European position performs unexpectedly, KraneShares Global 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 Global will offset losses from the drop in KraneShares Global's long position.| KraneShares European vs. KraneShares California Carbon | KraneShares European vs. KraneShares Global Carbon | KraneShares European vs. iPath Series B |
| KraneShares Global vs. Goldman Sachs Physical | KraneShares Global vs. iShares Gold Trust | KraneShares Global vs. iShares Bloomberg Roll |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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