Correlation Between Van Eck and KraneShares Trust

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

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

Diversification Opportunities for Van Eck and KraneShares Trust

-0.47

Correlation Coefficient

Van Eck  KraneShares Trust

Very good diversification

The 3 months correlation between Van and KraneShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Van Eck and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Van Eck 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 Van Eck 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 Van Eck i.e., Van Eck and KraneShares Trust go up and down completely randomly.

Pair Corralation between Van Eck and KraneShares Trust

Considering the 90-day investment horizon Van Eck is expected to generate 0.34 times more return on investment than KraneShares Trust. However, Van Eck is 2.97 times less risky than KraneShares Trust. It trades about 0.27 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.04 per unit of risk. If you would invest  2,720  in Van Eck on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Van Eck or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	46.88%
Values	Daily Returns

Van Eck  vs.  KraneShares Trust

Van Eck

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Van Eck has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Van Eck is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

KraneShares Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, KraneShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Van Eck and KraneShares Trust

The main advantage of trading using opposite Van Eck and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Van Eck 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 Van Eck 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.