Correlation Between SPDR MSCI and ETF Series

Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on SPDR MSCI and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and ETF Series.

Diversification Opportunities for SPDR MSCI and ETF Series

0.94

Correlation Coefficient

SPDR MSCI  ETF Series

Almost no diversification

The 3 months correlation between SPDR and ETF is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI Emerging and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and ETF Series go up and down completely randomly.

Pair Corralation between SPDR MSCI and ETF Series

Given the investment horizon of 90 days SPDR MSCI is expected to generate 2.14 times less return on investment than ETF Series. In addition to that, SPDR MSCI is 1.22 times more volatile than ETF Series Solutions. It trades about 0.07 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.18 per unit of volatility. If you would invest  2,327  in ETF Series Solutions on December 26, 2024 and sell it today you would earn a total of  221.38  from holding ETF Series Solutions or generate 9.51% 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 Emerging  vs.  ETF Series Solutions

SPDR MSCI Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI Emerging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, SPDR MSCI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ETF Series Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ETF Series may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SPDR MSCI and ETF Series

The main advantage of trading using opposite SPDR MSCI and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.

The idea behind SPDR MSCI Emerging and ETF Series Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.