Correlation Between KraneShares CSI and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Leverage Shares 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 Leverage Shares 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 Leverage Shares 3x, you can compare the effects of market volatilities on KraneShares CSI and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Leverage Shares.
Diversification Opportunities for KraneShares CSI and Leverage Shares
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KraneShares and Leverage is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Leverage Shares go up and down completely randomly.
Pair Corralation between KraneShares CSI and Leverage Shares
Assuming the 90 days trading horizon KraneShares CSI China is expected to under-perform the Leverage Shares. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares CSI China is 8.18 times less risky than Leverage Shares. The etf trades about -0.21 of its potential returns per unit of risk. The Leverage Shares 3x is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,406,710 in Leverage Shares 3x on August 27, 2024 and sell it today you would earn a total of 1,914,900 from holding Leverage Shares 3x or generate 136.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. Leverage Shares 3x
Performance |
| Timeline |
| KraneShares CSI China |
| Leverage Shares 3x |
KraneShares CSI and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and Leverage Shares
The main advantage of trading using opposite KraneShares CSI and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| KraneShares CSI vs. Leverage Shares 3x | KraneShares CSI vs. WisdomTree SP 500 | KraneShares CSI vs. WisdomTree Silver 3x | KraneShares CSI vs. Leverage Shares 3x |
| Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation | Leverage Shares vs. GraniteShares 3x Long |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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