Correlation Between Exxon and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Exxon and KraneShares Trust 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 Exxon and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and KraneShares Trust, you can compare the effects of market volatilities on Exxon and KraneShares Trust 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 Exxon with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and KraneShares Trust.
Diversification Opportunities for Exxon and KraneShares Trust
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and KraneShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Exxon 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 Exxon Mobil Corp are associated (or correlated) with KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of Exxon i.e., Exxon and KraneShares Trust go up and down completely randomly.
Pair Corralation between Exxon and KraneShares Trust
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 2.45 times more return on investment than KraneShares Trust. However, Exxon is 2.45 times more volatile than KraneShares Trust. It trades about 0.05 of its potential returns per unit of risk. KraneShares Trust is currently generating about -0.02 per unit of risk. If you would invest 11,632 in Exxon Mobil Corp on August 30, 2024 and sell it today you would earn a total of 134.00 from holding Exxon Mobil Corp or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exxon Mobil Corp vs. KraneShares Trust
Performance |
| Timeline |
| Exxon Mobil Corp |
| KraneShares Trust |
Exxon and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and KraneShares Trust
The main advantage of trading using opposite Exxon and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, KraneShares Trust 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 Trust will offset losses from the drop in KraneShares Trust's long position.| Exxon vs. BP PLC ADR | Exxon vs. Shell PLC ADR | Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Suncor Energy |
| KraneShares Trust vs. Freedom Day Dividend | KraneShares Trust vs. Franklin Templeton ETF | KraneShares Trust vs. iShares MSCI China | KraneShares Trust vs. Tidal Trust II |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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