Correlation Between KraneShares MSCI and IShares Dividend

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

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

Diversification Opportunities for KraneShares MSCI and IShares Dividend

0.23

Correlation Coefficient

KraneShares MSCI  IShares Dividend

Modest diversification

The 3 months correlation between KraneShares and IShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI One and iShares Dividend and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dividend and KraneShares MSCI 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 MSCI One are associated (or correlated) with IShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dividend has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and IShares Dividend go up and down completely randomly.

Pair Corralation between KraneShares MSCI and IShares Dividend

Given the investment horizon of 90 days KraneShares MSCI is expected to generate 2.3 times less return on investment than IShares Dividend. In addition to that, KraneShares MSCI is 2.55 times more volatile than iShares Dividend and. It trades about 0.03 of its total potential returns per unit of risk. iShares Dividend and is currently generating about 0.18 per unit of volatility. If you would invest  4,674  in iShares Dividend and on September 5, 2024 and sell it today you would earn a total of  369.00  from holding iShares Dividend and or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

KraneShares MSCI One  vs.  iShares Dividend and

KraneShares MSCI One

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI One are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, KraneShares MSCI is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

iShares Dividend

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, IShares Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KraneShares MSCI and IShares Dividend

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

The idea behind KraneShares MSCI One and iShares Dividend and 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..