Correlation Between SPDR MSCI and IShares Asia
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and IShares Asia 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 IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI World and iShares Asia Pacific, you can compare the effects of market volatilities on SPDR MSCI and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and IShares Asia.
Diversification Opportunities for SPDR MSCI and IShares Asia
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and IShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI World and iShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Pacific 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 World are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Pacific has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and IShares Asia go up and down completely randomly.
Pair Corralation between SPDR MSCI and IShares Asia
Assuming the 90 days trading horizon SPDR MSCI World is expected to under-perform the IShares Asia. In addition to that, SPDR MSCI is 1.2 times more volatile than iShares Asia Pacific. It trades about -0.04 of its total potential returns per unit of risk. iShares Asia Pacific is currently generating about 0.11 per unit of volatility. If you would invest 2,198 in iShares Asia Pacific on August 28, 2024 and sell it today you would earn a total of 42.00 from holding iShares Asia Pacific or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI World vs. iShares Asia Pacific
Performance |
| Timeline |
| SPDR MSCI World |
| iShares Asia Pacific |
SPDR MSCI and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and IShares Asia
The main advantage of trading using opposite SPDR MSCI and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, IShares Asia 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 IShares Asia will offset losses from the drop in IShares Asia's long position.| SPDR MSCI vs. SPDR Dow Jones | SPDR MSCI vs. iShares SP 500 | SPDR MSCI vs. iShares China CNY | SPDR MSCI vs. iShares Core MSCI |
| IShares Asia vs. SPDR Dow Jones | IShares Asia vs. iShares SP 500 | IShares Asia vs. iShares China CNY | IShares Asia vs. iShares Core MSCI |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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