Correlation Between KraneShares CSI and Xtrackers Harvest
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Xtrackers Harvest 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 KraneShares CSI and Xtrackers Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares CSI China and Xtrackers Harvest CSI, you can compare the effects of market volatilities on KraneShares CSI and Xtrackers Harvest 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 KraneShares CSI with a short position of Xtrackers Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Xtrackers Harvest.
Diversification Opportunities for KraneShares CSI and Xtrackers Harvest
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KraneShares and Xtrackers is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and KraneShares CSI 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 KraneShares CSI China are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Xtrackers Harvest go up and down completely randomly.
Pair Corralation between KraneShares CSI and Xtrackers Harvest
Given the investment horizon of 90 days KraneShares CSI China is expected to generate 1.65 times more return on investment than Xtrackers Harvest. However, KraneShares CSI is 1.65 times more volatile than Xtrackers Harvest CSI. It trades about 0.2 of its potential returns per unit of risk. Xtrackers Harvest CSI is currently generating about -0.04 per unit of risk. If you would invest 2,605 in KraneShares CSI China on January 26, 2024 and sell it today you would earn a total of 191.00 from holding KraneShares CSI China or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
KraneShares CSI China vs. Xtrackers Harvest CSI
Performance |
| Timeline |
| KraneShares CSI China |
| Xtrackers Harvest CSI |
KraneShares CSI and Xtrackers Harvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and Xtrackers Harvest
The main advantage of trading using opposite KraneShares CSI and Xtrackers Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Xtrackers Harvest 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 Xtrackers Harvest will offset losses from the drop in Xtrackers Harvest's long position.| KraneShares CSI vs. iShares MSCI India | KraneShares CSI vs. HUMANA INC | KraneShares CSI vs. Aquagold International | KraneShares CSI vs. Morningstar Unconstrained Allocation |
| Xtrackers Harvest vs. iShares MSCI India | Xtrackers Harvest vs. HUMANA INC | Xtrackers Harvest vs. Aquagold International | Xtrackers Harvest vs. Morningstar Unconstrained Allocation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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