Correlation Between KraneShares CSI and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and KraneShares MSCI 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 KraneShares MSCI 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 KraneShares MSCI All, you can compare the effects of market volatilities on KraneShares CSI and KraneShares MSCI 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 KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and KraneShares MSCI.
Diversification Opportunities for KraneShares CSI and KraneShares MSCI
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KraneShares and KraneShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All 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 KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI All has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and KraneShares MSCI go up and down completely randomly.
Pair Corralation between KraneShares CSI and KraneShares MSCI
Assuming the 90 days trading horizon KraneShares CSI is expected to generate 1.51 times less return on investment than KraneShares MSCI. But when comparing it to its historical volatility, KraneShares CSI China is 1.13 times less risky than KraneShares MSCI. It trades about 0.01 of its potential returns per unit of risk. KraneShares MSCI All is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,462 in KraneShares MSCI All on August 27, 2024 and sell it today you would earn a total of 56.00 from holding KraneShares MSCI All or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
KraneShares CSI China vs. KraneShares MSCI All
Performance |
| Timeline |
| KraneShares CSI China |
| KraneShares MSCI All |
KraneShares CSI and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and KraneShares MSCI
The main advantage of trading using opposite KraneShares CSI and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, KraneShares MSCI 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 MSCI will offset losses from the drop in KraneShares MSCI's 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 |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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