Correlation Between SPDR SPASX and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and IShares MSCI 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 SPASX and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR SPASX 200 and iShares MSCI Emerging, you can compare the effects of market volatilities on SPDR SPASX and IShares MSCI 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 SPASX with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and IShares MSCI.

Diversification Opportunities for SPDR SPASX and IShares MSCI

-0.34

Correlation Coefficient

SPDR SPASX  IShares MSCI

Very good diversification

The 3 months correlation between SPDR and IShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and SPDR SPASX 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 SPASX 200 are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Emerging has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and IShares MSCI go up and down completely randomly.

Pair Corralation between SPDR SPASX and IShares MSCI

Assuming the 90 days trading horizon SPDR SPASX 200 is expected to under-perform the IShares MSCI. In addition to that, SPDR SPASX is 1.65 times more volatile than iShares MSCI Emerging. It trades about -0.09 of its total potential returns per unit of risk. iShares MSCI Emerging is currently generating about 0.13 per unit of volatility. If you would invest  6,544  in iShares MSCI Emerging on December 1, 2024 and sell it today you would earn a total of  415.00  from holding iShares MSCI Emerging or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SPDR SPASX 200  vs.  iShares MSCI Emerging

SPDR SPASX 200

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SPASX 200 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

iShares MSCI Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Emerging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SPDR SPASX and IShares MSCI

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

The idea behind SPDR SPASX 200 and iShares MSCI Emerging 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.