Correlation Between KraneShares CSI and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Vanguard FTSE 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 CSI and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares CSI China and Vanguard FTSE Developed, you can compare the effects of market volatilities on KraneShares CSI and Vanguard FTSE 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 CSI with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Vanguard FTSE.
Diversification Opportunities for KraneShares CSI and Vanguard FTSE
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between KraneShares and Vanguard is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and KraneShares CSI 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 CSI China are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Vanguard FTSE go up and down completely randomly.
Pair Corralation between KraneShares CSI and Vanguard FTSE
Assuming the 90 days trading horizon KraneShares CSI China is expected to generate 3.29 times more return on investment than Vanguard FTSE. However, KraneShares CSI is 3.29 times more volatile than Vanguard FTSE Developed. It trades about 0.14 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about -0.12 per unit of risk. If you would invest 1,035 in KraneShares CSI China on September 2, 2024 and sell it today you would earn a total of 260.00 from holding KraneShares CSI China or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. Vanguard FTSE Developed
Performance |
| Timeline |
| KraneShares CSI China |
| Vanguard FTSE Developed |
KraneShares CSI and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and Vanguard FTSE
The main advantage of trading using opposite KraneShares CSI and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.| KraneShares CSI vs. Vanguard FTSE Developed | KraneShares CSI vs. Leverage Shares 2x | KraneShares CSI vs. Amundi Index Solutions | KraneShares CSI vs. Amundi Index Solutions |
| Vanguard FTSE vs. Leverage Shares 2x | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Albion Venture Capital |
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.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |