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 Europe and SPDR SP Financials, 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
Excellent diversification
The 3 months correlation between SPDR and SPDR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI Europe and SPDR SP Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Financials 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 Europe 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 Financials 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
Assuming the 90 days trading horizon SPDR MSCI Europe is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, SPDR MSCI Europe is 1.18 times less risky than SPDR SP. The etf trades about -0.15 of its potential returns per unit of risk. The SPDR SP Financials is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 5,382 in SPDR SP Financials on September 3, 2024 and sell it today you would earn a total of 599.00 from holding SPDR SP Financials or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI Europe vs. SPDR SP Financials
Performance |
| Timeline |
| SPDR MSCI Europe |
| SPDR SP Financials |
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. UBSFund Solutions MSCI | SPDR MSCI vs. Vanguard SP 500 | SPDR MSCI vs. iShares VII PLC | SPDR MSCI vs. iShares Core SP |
| SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR SP Utilities | SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR MSCI EM |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |