Correlation Between KraneShares MSCI and KraneShares ICBCCS
Can any of the company-specific risk be diversified away by investing in both KraneShares MSCI and KraneShares ICBCCS 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 ICBCCS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares MSCI All and KraneShares ICBCCS SP, you can compare the effects of market volatilities on KraneShares MSCI and KraneShares ICBCCS 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 ICBCCS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares MSCI and KraneShares ICBCCS.
Diversification Opportunities for KraneShares MSCI and KraneShares ICBCCS
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KraneShares and KraneShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI All and KraneShares ICBCCS SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares ICBCCS 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 All are associated (or correlated) with KraneShares ICBCCS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares ICBCCS has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and KraneShares ICBCCS go up and down completely randomly.
Pair Corralation between KraneShares MSCI and KraneShares ICBCCS
Assuming the 90 days trading horizon KraneShares MSCI All is expected to under-perform the KraneShares ICBCCS. In addition to that, KraneShares MSCI is 1.25 times more volatile than KraneShares ICBCCS SP. It trades about -0.11 of its total potential returns per unit of risk. KraneShares ICBCCS SP is currently generating about -0.04 per unit of volatility. If you would invest 94,785 in KraneShares ICBCCS SP on August 30, 2024 and sell it today you would lose (1,810) from holding KraneShares ICBCCS SP or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
KraneShares MSCI All vs. KraneShares ICBCCS SP
Performance |
| Timeline |
| KraneShares MSCI All |
| KraneShares ICBCCS |
KraneShares MSCI and KraneShares ICBCCS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares MSCI and KraneShares ICBCCS
The main advantage of trading using opposite KraneShares MSCI and KraneShares ICBCCS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares MSCI position performs unexpectedly, KraneShares ICBCCS 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 ICBCCS will offset losses from the drop in KraneShares ICBCCS's long position.| KraneShares MSCI vs. KraneShares ICBCCS SP | KraneShares MSCI vs. KraneShares Electric Vehicles | KraneShares MSCI vs. KraneShares CSI China | KraneShares MSCI vs. KraneShares MSCI China |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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