Correlation Between Vanguard FTSE and KraneShares
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 Vanguard FTSE and KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Emerging and KraneShares, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and KraneShares.
Diversification Opportunities for Vanguard FTSE and KraneShares
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and KraneShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and Vanguard FTSE 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 Vanguard FTSE Emerging 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 Vanguard FTSE i.e., Vanguard FTSE and KraneShares go up and down completely randomly.
Pair Corralation between Vanguard FTSE and KraneShares
Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to generate 1.45 times more return on investment than KraneShares. However, Vanguard FTSE is 1.45 times more volatile than KraneShares. It trades about 0.06 of its potential returns per unit of risk. KraneShares is currently generating about -0.1 per unit of risk. If you would invest 4,346 in Vanguard FTSE Emerging on September 12, 2024 and sell it today you would earn a total of 317.00 from holding Vanguard FTSE Emerging or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.06% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. KraneShares
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vanguard FTSE and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and KraneShares
The main advantage of trading using opposite Vanguard FTSE and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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