Correlation Between KraneShares Asia and SPDR Bloomberg

Can any of the company-specific risk be diversified away by investing in both KraneShares Asia and SPDR Bloomberg 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 SPDR Bloomberg 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 SPDR Bloomberg International, you can compare the effects of market volatilities on KraneShares Asia and SPDR Bloomberg 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 SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Asia and SPDR Bloomberg.

Diversification Opportunities for KraneShares Asia and SPDR Bloomberg

-0.83

Correlation Coefficient

KraneShares Asia  SPDR Bloomberg

Pay attention - limited upside

The 3 months correlation between KraneShares and SPDR is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Asia Pacific and SPDR Bloomberg International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Inter has no effect on the direction of KraneShares Asia i.e., KraneShares Asia and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between KraneShares Asia and SPDR Bloomberg

Given the investment horizon of 90 days KraneShares Asia Pacific is expected to under-perform the SPDR Bloomberg. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares Asia Pacific is 1.04 times less risky than SPDR Bloomberg. The etf trades about -0.15 of its potential returns per unit of risk. The SPDR Bloomberg International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,175  in SPDR Bloomberg International on September 19, 2024 and sell it today you would earn a total of  11.00  from holding SPDR Bloomberg International or generate 0.51% return on investment over 90 days.

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

KraneShares Asia Pacific  vs.  SPDR Bloomberg International

KraneShares Asia Pacific

Risk-Adjusted Performance

3 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Asia Pacific are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

SPDR Bloomberg Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR Bloomberg 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 SPDR Bloomberg

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

The idea behind KraneShares Asia Pacific and SPDR Bloomberg 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 Stocks Directory module to find actively traded stocks across global markets.