Correlation Between Global X and KraneShares MSCI

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

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

Diversification Opportunities for Global X and KraneShares MSCI

-0.42

Correlation Coefficient

Global X  KraneShares MSCI

Very good diversification

The 3 months correlation between Global and KraneShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and KraneShares MSCI One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI One and Global X 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 Global X Infrastructure are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI One has no effect on the direction of Global X i.e., Global X and KraneShares MSCI go up and down completely randomly.

Pair Corralation between Global X and KraneShares MSCI

Given the investment horizon of 90 days Global X Infrastructure is expected to under-perform the KraneShares MSCI. In addition to that, Global X is 2.15 times more volatile than KraneShares MSCI One. It trades about -0.08 of its total potential returns per unit of risk. KraneShares MSCI One is currently generating about 0.05 per unit of volatility. If you would invest  2,118  in KraneShares MSCI One on December 30, 2024 and sell it today you would earn a total of  41.00  from holding KraneShares MSCI One or generate 1.94% return on investment over 90 days.

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

Global X Infrastructure  vs.  KraneShares MSCI One

Global X Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

KraneShares MSCI One

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI One are ranked lower than 4 (%) 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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global X and KraneShares MSCI

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

The idea behind Global X Infrastructure and KraneShares MSCI One 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.