Correlation Between KraneShares CSI and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Direxion Daily 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 Direxion Daily 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 Direxion Daily CSI, you can compare the effects of market volatilities on KraneShares CSI and Direxion Daily 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 Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Direxion Daily.
Diversification Opportunities for KraneShares CSI and Direxion Daily
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KraneShares and Direxion is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Direxion Daily CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily CSI 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 Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily CSI has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Direxion Daily go up and down completely randomly.
Pair Corralation between KraneShares CSI and Direxion Daily
Given the investment horizon of 90 days KraneShares CSI China is expected to generate 0.6 times more return on investment than Direxion Daily. However, KraneShares CSI China is 1.68 times less risky than Direxion Daily. It trades about -0.06 of its potential returns per unit of risk. Direxion Daily CSI is currently generating about -0.12 per unit of risk. If you would invest 2,996 in KraneShares CSI China on October 21, 2024 and sell it today you would lose (58.00) from holding KraneShares CSI China or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. Direxion Daily CSI
Performance |
| Timeline |
| KraneShares CSI China |
| Direxion Daily CSI |
KraneShares CSI and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and Direxion Daily
The main advantage of trading using opposite KraneShares CSI and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| KraneShares CSI vs. iShares MSCI China | KraneShares CSI vs. Invesco China Technology | KraneShares CSI vs. Xtrackers Harvest CSI | KraneShares CSI vs. iShares China Large Cap |
| Direxion Daily vs. Direxion Daily FTSE | Direxion Daily vs. Xtrackers Harvest CSI | Direxion Daily vs. Xtrackers Harvest CSI | Direxion Daily vs. Direxion Daily FTSE |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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