Correlation Between KraneShares CSI and SPDR SP
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and SPDR SP 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 SPDR SP 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 SPDR SP China, you can compare the effects of market volatilities on KraneShares CSI and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and SPDR SP.
Diversification Opportunities for KraneShares CSI and SPDR SP
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KraneShares and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and SPDR SP China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP China 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP China has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and SPDR SP go up and down completely randomly.
Pair Corralation between KraneShares CSI and SPDR SP
Given the investment horizon of 90 days KraneShares CSI China is expected to under-perform the SPDR SP. In addition to that, KraneShares CSI is 1.2 times more volatile than SPDR SP China. It trades about -0.19 of its total potential returns per unit of risk. SPDR SP China is currently generating about -0.17 per unit of volatility. If you would invest 8,143 in SPDR SP China on August 27, 2024 and sell it today you would lose (599.00) from holding SPDR SP China or give up 7.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. SPDR SP China
Performance |
| Timeline |
| KraneShares CSI China |
| SPDR SP China |
KraneShares CSI and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and SPDR SP
The main advantage of trading using opposite KraneShares CSI and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Invesco Golden Dragon | SPDR SP vs. iShares MSCI Hong | SPDR SP vs. iShares MSCI China | SPDR SP vs. iShares China Large Cap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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