Correlation Between Invesco Emerging and KraneShares Asia
Can any of the company-specific risk be diversified away by investing in both Invesco Emerging and KraneShares Asia 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 Invesco Emerging and KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Emerging Markets and KraneShares Asia Pacific, you can compare the effects of market volatilities on Invesco Emerging and KraneShares Asia 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 Invesco Emerging with a short position of KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Emerging and KraneShares Asia.
Diversification Opportunities for Invesco Emerging and KraneShares Asia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and KraneShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Emerging Markets and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific and Invesco Emerging 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 Invesco Emerging Markets are associated (or correlated) with KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of Invesco Emerging i.e., Invesco Emerging and KraneShares Asia go up and down completely randomly.
Pair Corralation between Invesco Emerging and KraneShares Asia
Considering the 90-day investment horizon Invesco Emerging is expected to generate 1.07 times less return on investment than KraneShares Asia. In addition to that, Invesco Emerging is 2.81 times more volatile than KraneShares Asia Pacific. It trades about 0.08 of its total potential returns per unit of risk. KraneShares Asia Pacific is currently generating about 0.23 per unit of volatility. If you would invest 2,186 in KraneShares Asia Pacific on September 4, 2024 and sell it today you would earn a total of 293.00 from holding KraneShares Asia Pacific or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Emerging Markets vs. KraneShares Asia Pacific
Performance |
| Timeline |
| Invesco Emerging Markets |
| KraneShares Asia Pacific |
Invesco Emerging and KraneShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Emerging and KraneShares Asia
The main advantage of trading using opposite Invesco Emerging and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Emerging position performs unexpectedly, KraneShares Asia 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 Asia will offset losses from the drop in KraneShares Asia's long position.| Invesco Emerging vs. iShares JP Morgan | Invesco Emerging vs. SPDR Bloomberg International | Invesco Emerging vs. VanEck JP Morgan | Invesco Emerging vs. Invesco Fundamental High |
| KraneShares Asia vs. iShares iBoxx Investment | KraneShares Asia vs. iShares iBoxx High | KraneShares Asia vs. iShares National Muni | KraneShares Asia vs. Invesco Emerging Markets |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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