Correlation Between SPDR MSCI and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and SPDR SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI USA and SPDR SP 500, you can compare the effects of market volatilities on SPDR MSCI and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and SPDR SP.
Diversification Opportunities for SPDR MSCI and SPDR SP
No risk reduction
The 3 months correlation between SPDR and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI USA and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 USA are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR MSCI and SPDR SP
Given the investment horizon of 90 days SPDR MSCI is expected to generate 1.01 times less return on investment than SPDR SP. But when comparing it to its historical volatility, SPDR MSCI USA is 1.09 times less risky than SPDR SP. It trades about 0.36 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,689 in SPDR SP 500 on September 2, 2024 and sell it today you would earn a total of 255.00 from holding SPDR SP 500 or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI USA vs. SPDR SP 500
Performance |
| Timeline |
| SPDR MSCI USA |
| SPDR SP 500 |
SPDR MSCI and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and SPDR SP
The main advantage of trading using opposite SPDR MSCI and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| SPDR MSCI vs. SPDR MSCI ACWI | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec |
| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. SPDR SP 500 | SPDR SP vs. iShares Core SP | SPDR SP vs. Vanguard Dividend Appreciation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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