Correlation Between SPDR MSCI and Capital Group
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and Capital Group 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 Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI Emerging and Capital Group International, you can compare the effects of market volatilities on SPDR MSCI and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and Capital Group.
Diversification Opportunities for SPDR MSCI and Capital Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Capital is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI Emerging and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern 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 Emerging are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and Capital Group go up and down completely randomly.
Pair Corralation between SPDR MSCI and Capital Group
Given the investment horizon of 90 days SPDR MSCI Emerging is expected to under-perform the Capital Group. In addition to that, SPDR MSCI is 1.3 times more volatile than Capital Group International. It trades about -0.13 of its total potential returns per unit of risk. Capital Group International is currently generating about -0.09 per unit of volatility. If you would invest 2,513 in Capital Group International on September 2, 2024 and sell it today you would lose (39.00) from holding Capital Group International or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI Emerging vs. Capital Group International
Performance |
| Timeline |
| SPDR MSCI Emerging |
| Capital Group Intern |
SPDR MSCI and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and Capital Group
The main advantage of trading using opposite SPDR MSCI and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR DoubleLine Emerging | SPDR MSCI vs. SPDR MSCI EAFE |
| Capital Group vs. iShares ESG Aggregate | Capital Group vs. SPDR MSCI Emerging | Capital Group vs. Aquagold International | Capital Group vs. Thrivent High Yield |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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