Correlation Between VictoryShares THB and KraneShares Trust

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

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

Diversification Opportunities for VictoryShares THB and KraneShares Trust

0.14

Correlation Coefficient

VictoryShares THB  KraneShares Trust

Average diversification

The 3 months correlation between VictoryShares and KraneShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and VictoryShares THB 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 VictoryShares THB Mid are associated (or correlated) with KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and KraneShares Trust go up and down completely randomly.

Pair Corralation between VictoryShares THB and KraneShares Trust

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the KraneShares Trust. In addition to that, VictoryShares THB is 1.64 times more volatile than KraneShares Trust. It trades about -0.35 of its total potential returns per unit of risk. KraneShares Trust is currently generating about -0.43 per unit of volatility. If you would invest  2,697  in KraneShares Trust on October 12, 2024 and sell it today you would lose (130.00) from holding KraneShares Trust or give up 4.82% of portfolio value over 90 days.

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

VictoryShares THB Mid  vs.  KraneShares Trust

VictoryShares THB Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

KraneShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with VictoryShares THB and KraneShares Trust

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

The idea behind VictoryShares THB Mid and KraneShares Trust 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..