Correlation Between KraneShares Trust and FT Vest
Can any of the company-specific risk be diversified away by investing in both KraneShares Trust and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Trust and FT Vest Equity, you can compare the effects of market volatilities on KraneShares Trust and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Trust and FT Vest.
Diversification Opportunities for KraneShares Trust and FT Vest
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KraneShares and DHDG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Trust and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of KraneShares Trust i.e., KraneShares Trust and FT Vest go up and down completely randomly.
Pair Corralation between KraneShares Trust and FT Vest
Given the investment horizon of 90 days KraneShares Trust is expected to generate 0.9 times more return on investment than FT Vest. However, KraneShares Trust is 1.11 times less risky than FT Vest. It trades about 0.23 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.17 per unit of risk. If you would invest 2,545 in KraneShares Trust on August 26, 2024 and sell it today you would earn a total of 50.00 from holding KraneShares Trust or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares Trust vs. FT Vest Equity
Performance |
| Timeline |
| KraneShares Trust |
| FT Vest Equity |
KraneShares Trust and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Trust and FT Vest
The main advantage of trading using opposite KraneShares Trust and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Trust position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| KraneShares Trust vs. FT Vest Equity | KraneShares Trust vs. Northern Lights | KraneShares Trust vs. Dimensional International High | KraneShares Trust vs. First Trust Exchange Traded |
| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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