Correlation Between WisdomTree Managed and KraneShares MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and KraneShares MSCI 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 WisdomTree Managed and KraneShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Managed Futures and KraneShares MSCI Emerging, you can compare the effects of market volatilities on WisdomTree Managed and KraneShares MSCI 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 WisdomTree Managed with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and KraneShares MSCI.
Diversification Opportunities for WisdomTree Managed and KraneShares MSCI
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WisdomTree and KraneShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and KraneShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI Emerging and WisdomTree Managed 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 WisdomTree Managed Futures are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI Emerging has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and KraneShares MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Managed and KraneShares MSCI
Given the investment horizon of 90 days WisdomTree Managed Futures is expected to generate 1.73 times more return on investment than KraneShares MSCI. However, WisdomTree Managed is 1.73 times more volatile than KraneShares MSCI Emerging. It trades about 0.1 of its potential returns per unit of risk. KraneShares MSCI Emerging is currently generating about -0.11 per unit of risk. If you would invest 3,508 in WisdomTree Managed Futures on September 1, 2024 and sell it today you would earn a total of 96.00 from holding WisdomTree Managed Futures or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
WisdomTree Managed Futures vs. KraneShares MSCI Emerging
Performance |
| Timeline |
| WisdomTree Managed |
| KraneShares MSCI Emerging |
WisdomTree Managed and KraneShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Managed and KraneShares MSCI
The main advantage of trading using opposite WisdomTree Managed and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Managed position performs unexpectedly, KraneShares MSCI 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 MSCI will offset losses from the drop in KraneShares MSCI's long position.| WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. First Trust Alternative | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust Japan |
| KraneShares MSCI vs. Xtrackers MSCI Emerging | KraneShares MSCI vs. FlexShares Morningstar Emerging | KraneShares MSCI vs. First Trust Emerging |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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