Correlation Between WisdomTree International and KraneShares Artificial

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

By analyzing existing cross correlation between WisdomTree International Al and KraneShares Artificial Intelligence, you can compare the effects of market volatilities on WisdomTree International and KraneShares Artificial 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 WisdomTree International with a short position of KraneShares Artificial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and KraneShares Artificial.

Diversification Opportunities for WisdomTree International and KraneShares Artificial

-0.71

Correlation Coefficient

WisdomTree International  KraneShares Artificial

Pay attention - limited upside

The 3 months correlation between WisdomTree and KraneShares is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Al and KraneShares Artificial Intelli in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Artificial and WisdomTree International 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 WisdomTree International Al are associated (or correlated) with KraneShares Artificial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Artificial has no effect on the direction of WisdomTree International i.e., WisdomTree International and KraneShares Artificial go up and down completely randomly.

Pair Corralation between WisdomTree International and KraneShares Artificial

Given the investment horizon of 90 days WisdomTree International Al is expected to under-perform the KraneShares Artificial. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree International Al is 1.61 times less risky than KraneShares Artificial. The etf trades about -0.06 of its potential returns per unit of risk. The KraneShares Artificial Intelligence is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,353  in KraneShares Artificial Intelligence on September 3, 2024 and sell it today you would earn a total of  470.00  from holding KraneShares Artificial Intelligence or generate 19.97% return on investment over 90 days.

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

WisdomTree International Al  vs.  KraneShares Artificial Intelli

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International Al has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

KraneShares Artificial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Artificial Intelligence are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, KraneShares Artificial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree International and KraneShares Artificial

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

The idea behind WisdomTree International Al and KraneShares Artificial Intelligence 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..