Correlation Between KraneShares CSI and Vanguard Russell

Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Vanguard Russell 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 Vanguard Russell 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 Vanguard Russell 2000, you can compare the effects of market volatilities on KraneShares CSI and Vanguard Russell 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 Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Vanguard Russell.

Diversification Opportunities for KraneShares CSI and Vanguard Russell

0.49

Correlation Coefficient

KraneShares CSI  Vanguard Russell

Very weak diversification

The 3 months correlation between KraneShares and Vanguard is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 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 Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Vanguard Russell go up and down completely randomly.

Pair Corralation between KraneShares CSI and Vanguard Russell

Given the investment horizon of 90 days KraneShares CSI is expected to generate 3.2 times less return on investment than Vanguard Russell. In addition to that, KraneShares CSI is 1.45 times more volatile than Vanguard Russell 2000. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Russell 2000 is currently generating about 0.15 per unit of volatility. If you would invest  30,672  in Vanguard Russell 2000 on May 4, 2025 and sell it today you would earn a total of  3,296  from holding Vanguard Russell 2000 or generate 10.75% return on investment over 90 days.

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

KraneShares CSI China  vs.  Vanguard Russell 2000

KraneShares CSI China

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares CSI China are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, KraneShares CSI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Russell 2000

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 2000 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with KraneShares CSI and Vanguard Russell

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

The idea behind KraneShares CSI China and Vanguard Russell 2000 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 Anywhere module to track or share privately all of your investments from the convenience of any device.