Correlation Between SPDR SP and KraneShares
Can any of the company-specific risk be diversified away by investing in both SPDR SP and KraneShares 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 SPDR SP and KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and KraneShares, you can compare the effects of market volatilities on SPDR SP and KraneShares 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 SPDR SP with a short position of KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and KraneShares.
Diversification Opportunities for SPDR SP and KraneShares
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and KraneShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and SPDR SP 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 SPDR SP 500 are associated (or correlated) with KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of SPDR SP i.e., SPDR SP and KraneShares go up and down completely randomly.
Pair Corralation between SPDR SP and KraneShares
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.15 times more return on investment than KraneShares. However, SPDR SP is 1.15 times more volatile than KraneShares. It trades about 0.11 of its potential returns per unit of risk. KraneShares is currently generating about -0.1 per unit of risk. If you would invest 53,938 in SPDR SP 500 on September 12, 2024 and sell it today you would earn a total of 6,342 from holding SPDR SP 500 or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.06% |
| Values | Daily Returns |
SPDR SP 500 vs. KraneShares
Performance |
| Timeline |
| SPDR SP 500 |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR SP and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and KraneShares
The main advantage of trading using opposite SPDR SP and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, KraneShares 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 will offset losses from the drop in KraneShares' long position.| SPDR SP vs. SPDR Nuveen Municipal | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR Bloomberg Emerging |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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