Correlation Between IShares Core and KraneShares Emerging

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

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

Diversification Opportunities for IShares Core and KraneShares Emerging

-0.62

Correlation Coefficient

IShares Core  KraneShares Emerging

Excellent diversification

The 3 months correlation between IShares and KraneShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and KraneShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Emerging and IShares Core 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 Core SP are associated (or correlated) with KraneShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Emerging has no effect on the direction of IShares Core i.e., IShares Core and KraneShares Emerging go up and down completely randomly.

Pair Corralation between IShares Core and KraneShares Emerging

Considering the 90-day investment horizon iShares Core SP is expected to generate 0.48 times more return on investment than KraneShares Emerging. However, iShares Core SP is 2.06 times less risky than KraneShares Emerging. It trades about 0.11 of its potential returns per unit of risk. KraneShares Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest  44,102  in iShares Core SP on October 4, 2024 and sell it today you would earn a total of  14,643  from holding iShares Core SP or generate 33.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

iShares Core SP  vs.  KraneShares Emerging Markets

iShares Core SP

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

KraneShares Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's primary indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with IShares Core and KraneShares Emerging

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

The idea behind iShares Core SP and KraneShares Emerging Markets 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.