Correlation Between KraneShares Emerging and Global X

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

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

Diversification Opportunities for KraneShares Emerging and Global X

0.01

Correlation Coefficient

KraneShares Emerging  Global X

Significant diversification

The 3 months correlation between KraneShares and Global is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Emerging Markets and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and KraneShares Emerging 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 Emerging Markets are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of KraneShares Emerging i.e., KraneShares Emerging and Global X go up and down completely randomly.

Pair Corralation between KraneShares Emerging and Global X

Given the investment horizon of 90 days KraneShares Emerging Markets is expected to generate 1.77 times more return on investment than Global X. However, KraneShares Emerging is 1.77 times more volatile than Global X MSCI. It trades about -0.06 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.12 per unit of risk. If you would invest  1,826  in KraneShares Emerging Markets on September 19, 2024 and sell it today you would lose (75.99) from holding KraneShares Emerging Markets or give up 4.16% of portfolio value over 90 days.

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

KraneShares Emerging Markets  vs.  Global X MSCI

KraneShares Emerging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Emerging Markets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, KraneShares Emerging may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with KraneShares Emerging and Global X

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

The idea behind KraneShares Emerging Markets and Global X MSCI 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.