Correlation Between NYSE Composite and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and KraneShares Trust, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and KraneShares Trust.
Diversification Opportunities for NYSE Composite and KraneShares Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and KraneShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and KraneShares Trust go up and down completely randomly.
Pair Corralation between NYSE Composite and KraneShares Trust
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.7 times more return on investment than KraneShares Trust. However, NYSE Composite is 1.7 times more volatile than KraneShares Trust. It trades about 0.24 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.23 per unit of risk. If you would invest 1,945,627 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 66,718 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. KraneShares Trust
Performance |
| Timeline |
NYSE Composite and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
KraneShares Trust
Pair trading matchups for KraneShares Trust
Pair Trading with NYSE Composite and KraneShares Trust
The main advantage of trading using opposite NYSE Composite and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| KraneShares Trust vs. FT Vest Equity | KraneShares Trust vs. Northern Lights | KraneShares Trust vs. Dimensional International High | KraneShares Trust vs. First Trust Exchange Traded |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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