Correlation Between IShares MSCI and KraneShares MSCI

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

By analyzing existing cross correlation between iShares MSCI Hong and KraneShares MSCI All, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and KraneShares MSCI.

Diversification Opportunities for IShares MSCI and KraneShares MSCI

0.26

Correlation Coefficient

IShares MSCI  KraneShares MSCI

Modest diversification

The 3 months correlation between IShares and KraneShares is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Hong and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All and IShares MSCI 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 iShares MSCI Hong 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 All has no effect on the direction of IShares MSCI i.e., IShares MSCI and KraneShares MSCI go up and down completely randomly.

Pair Corralation between IShares MSCI and KraneShares MSCI

Considering the 90-day investment horizon iShares MSCI Hong is expected to under-perform the KraneShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Hong is 1.28 times less risky than KraneShares MSCI. The etf trades about -0.03 of its potential returns per unit of risk. The KraneShares MSCI All is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,210  in KraneShares MSCI All on October 10, 2024 and sell it today you would lose (230.00) from holding KraneShares MSCI All or give up 10.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares MSCI Hong  vs.  KraneShares MSCI All

iShares MSCI Hong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Hong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

KraneShares MSCI All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares MSCI All has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with IShares MSCI and KraneShares MSCI

The main advantage of trading using opposite IShares MSCI and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.

The idea behind iShares MSCI Hong and KraneShares MSCI All 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.