Correlation Between KraneShares Emerging and First Trust

Can any of the company-specific risk be diversified away by investing in both KraneShares Emerging 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 Emerging 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 Emerging Markets and First Trust Multi Manager, you can compare the effects of market volatilities on KraneShares Emerging 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 Emerging with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Emerging and First Trust.

Diversification Opportunities for KraneShares Emerging and First Trust

0.29

Correlation Coefficient

KraneShares Emerging  First Trust

Modest diversification

The 3 months correlation between KraneShares and First is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Emerging Markets and First Trust Multi Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and KraneShares Emerging 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 Emerging Markets 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 Multi has no effect on the direction of KraneShares Emerging i.e., KraneShares Emerging and First Trust go up and down completely randomly.

Pair Corralation between KraneShares Emerging and First Trust

Given the investment horizon of 90 days KraneShares Emerging Markets is expected to under-perform the First Trust. In addition to that, KraneShares Emerging is 1.01 times more volatile than First Trust Multi Manager. It trades about 0.0 of its total potential returns per unit of risk. First Trust Multi Manager is currently generating about 0.11 per unit of volatility. If you would invest  2,268  in First Trust Multi Manager on September 14, 2025 and sell it today you would earn a total of  232.00  from holding First Trust Multi Manager or generate 10.23% return on investment over 90 days.

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

KraneShares Emerging Markets  vs.  First Trust Multi Manager

KraneShares Emerging

Risk-Adjusted Performance

Weakest

Over the last 90 days KraneShares Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, KraneShares Emerging is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

First Trust Multi

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Manager are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with KraneShares Emerging and First Trust

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

The idea behind KraneShares Emerging Markets and First Trust Multi Manager 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.