Correlation Between KraneShares California and KDIV

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

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

Diversification Opportunities for KraneShares California and KDIV

0.0

Correlation Coefficient

KraneShares California  KDIV

Pay attention - limited upside

The 3 months correlation between KraneShares and KDIV is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares California Carbon and KDIV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDIV and KraneShares California 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 California Carbon are associated (or correlated) with KDIV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDIV has no effect on the direction of KraneShares California i.e., KraneShares California and KDIV go up and down completely randomly.

Pair Corralation between KraneShares California and KDIV

If you would invest (100.00) in KDIV on December 24, 2024 and sell it today you would earn a total of  100.00  from holding KDIV or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KraneShares California Carbon  vs.  KDIV

KraneShares California

Risk-Adjusted Performance

Very Weak

Over the last 90 days KraneShares California Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

KDIV

Risk-Adjusted Performance

Very Weak

Over the last 90 days KDIV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, KDIV is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with KraneShares California and KDIV

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

The idea behind KraneShares California Carbon and KDIV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.