Correlation Between SPDR MSCI and SPDR Global
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and SPDR Global 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 SPDR MSCI and SPDR Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI ACWI and SPDR Global Dow, you can compare the effects of market volatilities on SPDR MSCI and SPDR Global 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 SPDR MSCI with a short position of SPDR Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and SPDR Global.
Diversification Opportunities for SPDR MSCI and SPDR Global
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI ACWI and SPDR Global Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Global Dow and SPDR 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 SPDR MSCI ACWI are associated (or correlated) with SPDR Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Global Dow has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and SPDR Global go up and down completely randomly.
Pair Corralation between SPDR MSCI and SPDR Global
Considering the 90-day investment horizon SPDR MSCI ACWI is expected to generate 1.17 times more return on investment than SPDR Global. However, SPDR MSCI is 1.17 times more volatile than SPDR Global Dow. It trades about 0.23 of its potential returns per unit of risk. SPDR Global Dow is currently generating about 0.17 per unit of risk. If you would invest 2,881 in SPDR MSCI ACWI on November 29, 2024 and sell it today you would earn a total of 102.00 from holding SPDR MSCI ACWI or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR MSCI ACWI vs. SPDR Global Dow
Performance |
| Timeline |
| SPDR MSCI ACWI |
| SPDR Global Dow |
SPDR MSCI and SPDR Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and SPDR Global
The main advantage of trading using opposite SPDR MSCI and SPDR Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, SPDR Global 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 SPDR Global will offset losses from the drop in SPDR Global's long position.| SPDR MSCI vs. SPDR SP International | SPDR MSCI vs. SPDR SP Emerging | SPDR MSCI vs. SPDR Global Dow | SPDR MSCI vs. SPDR SP Global |
| SPDR Global vs. iShares Global 100 | SPDR Global vs. iShares MSCI Belgium | SPDR Global vs. iShares MSCI Netherlands | SPDR Global vs. iShares Dow Jones |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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