Correlation Between KraneShares Bosera and Pacer Financial

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

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

Diversification Opportunities for KraneShares Bosera and Pacer Financial

-0.19

Correlation Coefficient

KraneShares Bosera  Pacer Financial

Good diversification

The 3 months correlation between KraneShares and Pacer is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Bosera MSCI and Pacer Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Financial and KraneShares Bosera 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 Bosera MSCI are associated (or correlated) with Pacer Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Financial has no effect on the direction of KraneShares Bosera i.e., KraneShares Bosera and Pacer Financial go up and down completely randomly.

Pair Corralation between KraneShares Bosera and Pacer Financial

Considering the 90-day investment horizon KraneShares Bosera is expected to generate 3.69 times less return on investment than Pacer Financial. In addition to that, KraneShares Bosera is 1.12 times more volatile than Pacer Financial. It trades about 0.08 of its total potential returns per unit of risk. Pacer Financial is currently generating about 0.34 per unit of volatility. If you would invest  1,353  in Pacer Financial on September 17, 2024 and sell it today you would earn a total of  278.00  from holding Pacer Financial or generate 20.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

KraneShares Bosera MSCI  vs.  Pacer Financial

KraneShares Bosera MSCI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Bosera MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KraneShares Bosera sustained solid returns over the last few months and may actually be approaching a breakup point.

Pacer Financial

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Pacer Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Pacer Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KraneShares Bosera and Pacer Financial

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

The idea behind KraneShares Bosera MSCI and Pacer Financial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..