Correlation Between KraneShares CSI and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and WisdomTree SmallCap 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 WisdomTree SmallCap 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 WisdomTree SmallCap Earnings, you can compare the effects of market volatilities on KraneShares CSI and WisdomTree SmallCap 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 WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and WisdomTree SmallCap.
Diversification Opportunities for KraneShares CSI and WisdomTree SmallCap
0.77 | Correlation Coefficient |
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 CSI China and WisdomTree SmallCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between KraneShares CSI and WisdomTree SmallCap
Given the investment horizon of 90 days KraneShares CSI is expected to generate 1.12 times less return on investment than WisdomTree SmallCap. In addition to that, KraneShares CSI is 1.37 times more volatile than WisdomTree SmallCap Earnings. It trades about 0.11 of its total potential returns per unit of risk. WisdomTree SmallCap Earnings is currently generating about 0.18 per unit of volatility. If you would invest 4,643 in WisdomTree SmallCap Earnings on April 30, 2025 and sell it today you would earn a total of 624.00 from holding WisdomTree SmallCap Earnings or generate 13.44% 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. WisdomTree SmallCap Earnings
Performance |
Timeline |
KraneShares CSI China |
WisdomTree SmallCap |
KraneShares CSI and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KraneShares CSI and WisdomTree SmallCap
The main advantage of trading using opposite KraneShares CSI and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, WisdomTree SmallCap 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 SmallCap will offset losses from the drop in WisdomTree SmallCap'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 |
WisdomTree SmallCap vs. WisdomTree MidCap Earnings | WisdomTree SmallCap vs. WisdomTree Earnings 500 | WisdomTree SmallCap vs. Invesco SP SmallCap | WisdomTree SmallCap vs. Invesco FTSE RAFI |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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