Correlation Between KraneShares Trust and Invesco Exchange
Can any of the company-specific risk be diversified away by investing in both KraneShares Trust and Invesco Exchange 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 Trust and Invesco Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Trust and Invesco Exchange Traded, you can compare the effects of market volatilities on KraneShares Trust and Invesco Exchange 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 Trust with a short position of Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Trust and Invesco Exchange.
Diversification Opportunities for KraneShares Trust and Invesco Exchange
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KraneShares and Invesco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Trust and Invesco Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange Traded and KraneShares Trust 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 Trust are associated (or correlated) with Invesco Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange Traded has no effect on the direction of KraneShares Trust i.e., KraneShares Trust and Invesco Exchange go up and down completely randomly.
Pair Corralation between KraneShares Trust and Invesco Exchange
Given the investment horizon of 90 days KraneShares Trust is expected to under-perform the Invesco Exchange. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares Trust is 1.38 times less risky than Invesco Exchange. The etf trades about -0.02 of its potential returns per unit of risk. The Invesco Exchange Traded is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,130 in Invesco Exchange Traded on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Invesco Exchange Traded or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares Trust vs. Invesco Exchange Traded
Performance |
| Timeline |
| KraneShares Trust |
| Invesco Exchange Traded |
KraneShares Trust and Invesco Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Trust and Invesco Exchange
The main advantage of trading using opposite KraneShares Trust and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Trust position performs unexpectedly, Invesco Exchange 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 Invesco Exchange will offset losses from the drop in Invesco Exchange's long position.| KraneShares Trust vs. Freedom Day Dividend | KraneShares Trust vs. Franklin Templeton ETF | KraneShares Trust vs. iShares MSCI China | KraneShares Trust vs. Tidal Trust II |
| Invesco Exchange vs. Freedom Day Dividend | Invesco Exchange vs. Franklin Templeton ETF | Invesco Exchange vs. iShares MSCI China | Invesco Exchange vs. Tidal Trust II |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |