Correlation Between KraneShares Bosera and Direxion Daily

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

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

Diversification Opportunities for KraneShares Bosera and Direxion Daily

0.86

Correlation Coefficient

KraneShares Bosera  Direxion Daily

Very poor diversification

The 3 months correlation between KraneShares and Direxion is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Bosera MSCI and Direxion Daily CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily CSI and KraneShares Bosera 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 Bosera MSCI are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily CSI has no effect on the direction of KraneShares Bosera i.e., KraneShares Bosera and Direxion Daily go up and down completely randomly.

Pair Corralation between KraneShares Bosera and Direxion Daily

Considering the 90-day investment horizon KraneShares Bosera MSCI is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares Bosera MSCI is 2.08 times less risky than Direxion Daily. The etf trades about 0.0 of its potential returns per unit of risk. The Direxion Daily CSI is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,920  in Direxion Daily CSI on September 19, 2024 and sell it today you would lose (442.00) from holding Direxion Daily CSI or give up 23.02% of portfolio value over 90 days.

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

KraneShares Bosera MSCI  vs.  Direxion Daily CSI

KraneShares Bosera MSCI

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Bosera MSCI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KraneShares Bosera sustained solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily CSI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily CSI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KraneShares Bosera and Direxion Daily

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

The idea behind KraneShares Bosera MSCI and Direxion Daily CSI 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.