Correlation Between KraneShares Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KraneShares Global and Dow Jones 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 Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Global Carbon and Dow Jones Industrial, you can compare the effects of market volatilities on KraneShares Global and Dow Jones 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 Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Global and Dow Jones.
Diversification Opportunities for KraneShares Global and Dow Jones
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KraneShares and Dow is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Global Carbon and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and KraneShares Global 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 Global Carbon are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of KraneShares Global i.e., KraneShares Global and Dow Jones go up and down completely randomly.
Pair Corralation between KraneShares Global and Dow Jones
Given the investment horizon of 90 days KraneShares Global Carbon is expected to under-perform the Dow Jones. In addition to that, KraneShares Global is 2.77 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of volatility. If you would invest 4,471,358 in Dow Jones Industrial on November 27, 2024 and sell it today you would lose (125,237) from holding Dow Jones Industrial or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares Global Carbon vs. Dow Jones Industrial
Performance |
| Timeline |
KraneShares Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KraneShares Global Carbon
Pair trading matchups for KraneShares Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KraneShares Global and Dow Jones
The main advantage of trading using opposite KraneShares Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Global position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| KraneShares Global vs. United States Brent | KraneShares Global vs. ProShares K 1 Free | KraneShares Global vs. Invesco DB Energy | KraneShares Global vs. Invesco DB Oil |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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