Correlation Between ProShares and KraneShares MSCI

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

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

Diversification Opportunities for ProShares and KraneShares MSCI

0.27

Correlation Coefficient

ProShares  KraneShares MSCI

Modest diversification

The 3 months correlation between ProShares and KraneShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ProShares DJ Brookfield 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 ProShares 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 ProShares DJ Brookfield 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 ProShares i.e., ProShares and KraneShares MSCI go up and down completely randomly.

Pair Corralation between ProShares and KraneShares MSCI

Given the investment horizon of 90 days ProShares DJ Brookfield is expected to generate 0.85 times more return on investment than KraneShares MSCI. However, ProShares DJ Brookfield is 1.18 times less risky than KraneShares MSCI. It trades about 0.06 of its potential returns per unit of risk. KraneShares MSCI One is currently generating about 0.01 per unit of risk. If you would invest  4,110  in ProShares DJ Brookfield on December 4, 2024 and sell it today you would earn a total of  958.00  from holding ProShares DJ Brookfield or generate 23.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.18%
Values	Daily Returns

ProShares DJ Brookfield  vs.  KraneShares MSCI One

ProShares DJ Brookfield

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares DJ Brookfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, ProShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KraneShares MSCI One

Risk-Adjusted Performance

Very Weak

Over the last 90 days KraneShares MSCI One has generated negative risk-adjusted returns adding no value to investors with long positions. 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 ProShares and KraneShares MSCI

The main advantage of trading using opposite ProShares and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares 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 ProShares DJ Brookfield 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 Transaction History module to view history of all your transactions and understand their impact on performance.