Correlation Between KraneShares CSI and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and KraneShares Trust 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 Trust 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 Trust , you can compare the effects of market volatilities on KraneShares CSI and KraneShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and KraneShares Trust.
Diversification Opportunities for KraneShares CSI and KraneShares Trust
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KraneShares and KraneShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and KraneShares Trust go up and down completely randomly.
Pair Corralation between KraneShares CSI and KraneShares Trust
Given the investment horizon of 90 days KraneShares CSI is expected to generate 1.49 times less return on investment than KraneShares Trust. In addition to that, KraneShares CSI is 1.77 times more volatile than KraneShares Trust . It trades about 0.02 of its total potential returns per unit of risk. KraneShares Trust is currently generating about 0.04 per unit of volatility. If you would invest 2,612 in KraneShares Trust on November 4, 2024 and sell it today you would earn a total of 664.00 from holding KraneShares Trust or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. KraneShares Trust
Performance |
| Timeline |
| KraneShares CSI China |
| KraneShares Trust |
KraneShares CSI and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and KraneShares Trust
The main advantage of trading using opposite KraneShares CSI and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, KraneShares Trust 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 Trust will offset losses from the drop in KraneShares Trust'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 |
| KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II | KraneShares Trust vs. Tidal Trust II |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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