Correlation Between KraneShares CSI and First Trust
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and First 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 KraneShares CSI and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares CSI China and First Trust Emerging, you can compare the effects of market volatilities on KraneShares CSI and First 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 KraneShares CSI with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and First Trust.
Diversification Opportunities for KraneShares CSI and First Trust
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KraneShares and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging and KraneShares CSI 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 CSI China are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Emerging has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and First Trust go up and down completely randomly.
Pair Corralation between KraneShares CSI and First Trust
Given the investment horizon of 90 days KraneShares CSI China is expected to generate 2.97 times more return on investment than First Trust. However, KraneShares CSI is 2.97 times more volatile than First Trust Emerging. It trades about 0.15 of its potential returns per unit of risk. First Trust Emerging is currently generating about 0.16 per unit of risk. If you would invest 3,353 in KraneShares CSI China on May 26, 2025 and sell it today you would earn a total of 485.00 from holding KraneShares CSI China or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. First Trust Emerging
Performance |
| Timeline |
| KraneShares CSI China |
| First Trust Emerging |
KraneShares CSI and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and First Trust
The main advantage of trading using opposite KraneShares CSI and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, First 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 First Trust will offset losses from the drop in First Trust's long position.| KraneShares CSI vs. iShares MSCI China | KraneShares CSI vs. Invesco China Technology | KraneShares CSI vs. Xtrackers Harvest CSI | KraneShares CSI vs. iShares China Large Cap |
| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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