Correlation Between KraneShares MSCI and WisdomTree Managed

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

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

Diversification Opportunities for KraneShares MSCI and WisdomTree Managed

0.77

Correlation Coefficient

KraneShares MSCI  WisdomTree Managed

Poor diversification

The 3 months correlation between KraneShares and WisdomTree is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI China and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed and KraneShares MSCI 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 MSCI China are associated (or correlated) with WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and WisdomTree Managed go up and down completely randomly.

Pair Corralation between KraneShares MSCI and WisdomTree Managed

Given the investment horizon of 90 days KraneShares MSCI China is expected to generate 3.08 times more return on investment than WisdomTree Managed. However, KraneShares MSCI is 3.08 times more volatile than WisdomTree Managed Futures. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Managed Futures is currently generating about 0.12 per unit of risk. If you would invest  2,565  in KraneShares MSCI China on May 5, 2025 and sell it today you would earn a total of  132.00  from holding KraneShares MSCI China or generate 5.15% return on investment over 90 days.

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

KraneShares MSCI China  vs.  WisdomTree Managed Futures

KraneShares MSCI China

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI China are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, KraneShares MSCI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

WisdomTree Managed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KraneShares MSCI and WisdomTree Managed

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

The idea behind KraneShares MSCI China and WisdomTree Managed Futures 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.