Correlation Between Microsoft and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KraneShares Trust, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KraneShares Trust.
Diversification Opportunities for Microsoft and KraneShares Trust
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and KraneShares is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and KraneShares Trust go up and down completely randomly.
Pair Corralation between Microsoft and KraneShares Trust
Given the investment horizon of 90 days Microsoft is expected to under-perform the KraneShares Trust. In addition to that, Microsoft is 4.72 times more volatile than KraneShares Trust. It trades about -0.04 of its total potential returns per unit of risk. KraneShares Trust is currently generating about 0.25 per unit of volatility. If you would invest 2,670 in KraneShares Trust on November 9, 2024 and sell it today you would earn a total of 59.00 from holding KraneShares Trust or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. KraneShares Trust
Performance |
| Timeline |
| Microsoft |
| KraneShares Trust |
Microsoft and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KraneShares Trust
The main advantage of trading using opposite Microsoft and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| KraneShares Trust vs. Freedom Day Dividend | KraneShares Trust vs. Franklin Templeton ETF | KraneShares Trust vs. iShares MSCI China | 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Positions Ratings 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 |