Correlation Between KraneShares European and KSET
Can any of the company-specific risk be diversified away by investing in both KraneShares European and KSET 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 KSET 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 KSET, you can compare the effects of market volatilities on KraneShares European and KSET 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 KSET. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares European and KSET.
Diversification Opportunities for KraneShares European and KSET
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KraneShares and KSET is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares European Carbon and KSET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSET 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 KSET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSET has no effect on the direction of KraneShares European i.e., KraneShares European and KSET go up and down completely randomly.
Pair Corralation between KraneShares European and KSET
If you would invest 298.00 in KSET on August 30, 2024 and sell it today you would earn a total of 0.00 from holding KSET or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
KraneShares European Carbon vs. KSET
Performance |
| Timeline |
| KraneShares European |
| KSET |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KraneShares European and KSET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares European and KSET
The main advantage of trading using opposite KraneShares European and KSET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares European position performs unexpectedly, KSET 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 KSET will offset losses from the drop in KSET's long position.| KraneShares European vs. KraneShares California Carbon | KraneShares European vs. KraneShares Global Carbon | KraneShares European vs. iPath Series B |
| KSET vs. KraneShares European Carbon | KSET vs. KraneShares California Carbon | KSET vs. KraneShares Global Carbon | KSET 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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