Correlation Between SPDR DoubleLine and KraneShares Asia

Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine and KraneShares Asia 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 DoubleLine and KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR DoubleLine Emerging and KraneShares Asia Pacific, you can compare the effects of market volatilities on SPDR DoubleLine and KraneShares Asia 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 DoubleLine with a short position of KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and KraneShares Asia.

Diversification Opportunities for SPDR DoubleLine and KraneShares Asia

-0.39

Correlation Coefficient

SPDR DoubleLine  KraneShares Asia

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 DoubleLine Emerging and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific and SPDR DoubleLine 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 DoubleLine Emerging are associated (or correlated) with KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and KraneShares Asia go up and down completely randomly.

Pair Corralation between SPDR DoubleLine and KraneShares Asia

Given the investment horizon of 90 days SPDR DoubleLine Emerging is expected to under-perform the KraneShares Asia. But the etf apears to be less risky and, when comparing its historical volatility, SPDR DoubleLine Emerging is 1.94 times less risky than KraneShares Asia. The etf trades about -0.06 of its potential returns per unit of risk. The KraneShares Asia Pacific is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,431  in KraneShares Asia Pacific on September 19, 2024 and sell it today you would earn a total of  16.00  from holding KraneShares Asia Pacific or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPDR DoubleLine Emerging  vs.  KraneShares Asia Pacific

SPDR DoubleLine Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR DoubleLine Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

KraneShares Asia Pacific

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Asia Pacific are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KraneShares Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR DoubleLine and KraneShares Asia

The main advantage of trading using opposite SPDR DoubleLine and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine position performs unexpectedly, KraneShares Asia 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 Asia will offset losses from the drop in KraneShares Asia's long position.

The idea behind SPDR DoubleLine Emerging and KraneShares Asia Pacific pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.