Correlation Between SPDR MSCI and Barrons 400
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and Barrons 400 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 Barrons 400 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 Barrons 400 ETF, you can compare the effects of market volatilities on SPDR MSCI and Barrons 400 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 Barrons 400. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and Barrons 400.
Diversification Opportunities for SPDR MSCI and Barrons 400
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Barrons is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI USA and Barrons 400 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrons 400 ETF 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 Barrons 400. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrons 400 ETF has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and Barrons 400 go up and down completely randomly.
Pair Corralation between SPDR MSCI and Barrons 400
Considering the 90-day investment horizon SPDR MSCI is expected to generate 2.73 times less return on investment than Barrons 400. But when comparing it to its historical volatility, SPDR MSCI USA is 1.76 times less risky than Barrons 400. It trades about 0.2 of its potential returns per unit of risk. Barrons 400 ETF is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 7,243 in Barrons 400 ETF on August 30, 2024 and sell it today you would earn a total of 653.00 from holding Barrons 400 ETF or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR MSCI USA vs. Barrons 400 ETF
Performance |
| Timeline |
| SPDR MSCI USA |
| Barrons 400 ETF |
SPDR MSCI and Barrons 400 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and Barrons 400
The main advantage of trading using opposite SPDR MSCI and Barrons 400 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, Barrons 400 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 Barrons 400 will offset losses from the drop in Barrons 400's long position.| SPDR MSCI vs. SPDR SSGA Large | SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR Russell 1000 |
| Barrons 400 vs. FlexShares Quality Dividend | Barrons 400 vs. Invesco SP Spin Off | Barrons 400 vs. SPDR MSCI USA | Barrons 400 vs. ALPS International Sector |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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