Correlation Between KraneShares Asia and Vanguard Total

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

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

Diversification Opportunities for KraneShares Asia and Vanguard Total

-0.02

Correlation Coefficient

KraneShares Asia  Vanguard Total

Good diversification

The 3 months correlation between KraneShares and Vanguard is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Asia Pacific and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter and KraneShares Asia 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 Asia Pacific are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of KraneShares Asia i.e., KraneShares Asia and Vanguard Total go up and down completely randomly.

Pair Corralation between KraneShares Asia and Vanguard Total

Given the investment horizon of 90 days KraneShares Asia Pacific is expected to under-perform the Vanguard Total. In addition to that, KraneShares Asia is 2.09 times more volatile than Vanguard Total International. It trades about -0.29 of its total potential returns per unit of risk. Vanguard Total International is currently generating about 0.14 per unit of volatility. If you would invest  4,982  in Vanguard Total International on September 22, 2024 and sell it today you would earn a total of  33.00  from holding Vanguard Total International or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

KraneShares Asia Pacific  vs.  Vanguard Total International

KraneShares Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares Asia Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KraneShares Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total Inter

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Vanguard Total is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KraneShares Asia and Vanguard Total

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

The idea behind KraneShares Asia Pacific and Vanguard Total International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.