Correlation Between WisdomTree Natural and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and KraneShares CSI 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 WisdomTree Natural and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Natural Gas and KraneShares CSI China, you can compare the effects of market volatilities on WisdomTree Natural and KraneShares CSI 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 WisdomTree Natural with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and KraneShares CSI.
Diversification Opportunities for WisdomTree Natural and KraneShares CSI
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and KraneShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China and WisdomTree Natural 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 WisdomTree Natural Gas are associated (or correlated) with KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and KraneShares CSI go up and down completely randomly.
Pair Corralation between WisdomTree Natural and KraneShares CSI
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 1.58 times more return on investment than KraneShares CSI. However, WisdomTree Natural is 1.58 times more volatile than KraneShares CSI China. It trades about 0.24 of its potential returns per unit of risk. KraneShares CSI China is currently generating about 0.18 per unit of risk. If you would invest 66,015 in WisdomTree Natural Gas on November 28, 2024 and sell it today you would earn a total of 14,765 from holding WisdomTree Natural Gas or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. KraneShares CSI China
Performance |
| Timeline |
| WisdomTree Natural Gas |
| KraneShares CSI China |
WisdomTree Natural and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and KraneShares CSI
The main advantage of trading using opposite WisdomTree Natural and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, KraneShares CSI 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 CSI will offset losses from the drop in KraneShares CSI's long position.| WisdomTree Natural vs. WisdomTree Zinc | WisdomTree Natural vs. WisdomTree Brent Crude | WisdomTree Natural vs. WisdomTree Aluminium 2x | WisdomTree Natural vs. WisdomTree Enhanced Commodity |
| KraneShares CSI vs. KraneShares ICBCCS SP | KraneShares CSI vs. KraneShares Electric Vehicles | KraneShares CSI vs. KraneShares MSCI All | KraneShares CSI vs. KraneShares MSCI China |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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