Correlation Between KraneShares MSCI and KraneShares Emerging
Can any of the company-specific risk be diversified away by investing in both KraneShares MSCI and KraneShares Emerging 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 MSCI and KraneShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares MSCI China and KraneShares Emerging Markets, you can compare the effects of market volatilities on KraneShares MSCI and KraneShares Emerging 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 MSCI with a short position of KraneShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares MSCI and KraneShares Emerging.
Diversification Opportunities for KraneShares MSCI and KraneShares Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KraneShares and KraneShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI China and KraneShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Emerging and KraneShares MSCI 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 MSCI China are associated (or correlated) with KraneShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Emerging has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and KraneShares Emerging go up and down completely randomly.
Pair Corralation between KraneShares MSCI and KraneShares Emerging
Given the investment horizon of 90 days KraneShares MSCI is expected to generate 1.24 times less return on investment than KraneShares Emerging. In addition to that, KraneShares MSCI is 1.31 times more volatile than KraneShares Emerging Markets. It trades about 0.04 of its total potential returns per unit of risk. KraneShares Emerging Markets is currently generating about 0.07 per unit of volatility. If you would invest 1,375 in KraneShares Emerging Markets on November 3, 2024 and sell it today you would earn a total of 415.00 from holding KraneShares Emerging Markets or generate 30.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
KraneShares MSCI China vs. KraneShares Emerging Markets
Performance |
| Timeline |
| KraneShares MSCI China |
| KraneShares Emerging |
KraneShares MSCI and KraneShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares MSCI and KraneShares Emerging
The main advantage of trading using opposite KraneShares MSCI and KraneShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares MSCI position performs unexpectedly, KraneShares Emerging 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 Emerging will offset losses from the drop in KraneShares Emerging's long position.| KraneShares MSCI vs. KraneShares MSCI All | KraneShares MSCI vs. Global X MSCI | KraneShares MSCI vs. WisdomTree China ex State Owned |
| KraneShares Emerging vs. KraneShares Bosera MSCI | KraneShares Emerging vs. KraneShares MSCI One | KraneShares Emerging vs. Cambria Value and | KraneShares Emerging vs. KraneShares MSCI All |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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