Correlation Between ProShares Online and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both ProShares Online 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 ProShares Online and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Online Retail and KraneShares CSI China, you can compare the effects of market volatilities on ProShares Online 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 ProShares Online with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Online and KraneShares CSI.
Diversification Opportunities for ProShares Online and KraneShares CSI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and KraneShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Online Retail 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 ProShares Online 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 ProShares Online Retail 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 ProShares Online i.e., ProShares Online and KraneShares CSI go up and down completely randomly.
Pair Corralation between ProShares Online and KraneShares CSI
Given the investment horizon of 90 days ProShares Online Retail is expected to generate 0.7 times more return on investment than KraneShares CSI. However, ProShares Online Retail is 1.44 times less risky than KraneShares CSI. It trades about 0.05 of its potential returns per unit of risk. KraneShares CSI China is currently generating about 0.01 per unit of risk. If you would invest 3,171 in ProShares Online Retail on August 26, 2024 and sell it today you would earn a total of 1,322 from holding ProShares Online Retail or generate 41.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Online Retail vs. KraneShares CSI China
Performance |
| Timeline |
| ProShares Online Retail |
| KraneShares CSI China |
ProShares Online and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Online and KraneShares CSI
The main advantage of trading using opposite ProShares Online and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Online 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.| ProShares Online vs. VanEck Pharmaceutical ETF | ProShares Online vs. VanEck Biotech ETF | ProShares Online vs. VanEck Oil Services | ProShares Online vs. iShares Consumer Discretionary |
| 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 |
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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