Correlation Between US Global and KraneShares Electric

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Can any of the company-specific risk be diversified away by investing in both US Global and KraneShares Electric 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 US Global and KraneShares Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Sea and KraneShares Electric Vehicles, you can compare the effects of market volatilities on US Global and KraneShares Electric 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 US Global with a short position of KraneShares Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and KraneShares Electric.

Diversification Opportunities for US Global and KraneShares Electric

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between SEA and KraneShares is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding US Global Sea and KraneShares Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Electric and US Global 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 US Global Sea are associated (or correlated) with KraneShares Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Electric has no effect on the direction of US Global i.e., US Global and KraneShares Electric go up and down completely randomly.

Pair Corralation between US Global and KraneShares Electric

Considering the 90-day investment horizon US Global Sea is expected to under-perform the KraneShares Electric. But the etf apears to be less risky and, when comparing its historical volatility, US Global Sea is 1.98 times less risky than KraneShares Electric. The etf trades about -0.01 of its potential returns per unit of risk. The KraneShares Electric Vehicles is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,234  in KraneShares Electric Vehicles on December 30, 2023 and sell it today you would earn a total of  12.00  from holding KraneShares Electric Vehicles or generate 0.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

US Global Sea  vs.  KraneShares Electric Vehicles

 Performance 
       Timeline  
US Global Sea 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days US Global Sea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, US Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
KraneShares Electric 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days KraneShares Electric Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

US Global and KraneShares Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with US Global and KraneShares Electric

The main advantage of trading using opposite US Global and KraneShares Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global position performs unexpectedly, KraneShares Electric 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 Electric will offset losses from the drop in KraneShares Electric's long position.
The idea behind US Global Sea and KraneShares Electric Vehicles 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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