Correlation Between Schwab International and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both Schwab International and SPDR 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 Schwab International and SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab International Equity and SPDR MSCI ACWI, you can compare the effects of market volatilities on Schwab International and SPDR 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 Schwab International with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab International and SPDR MSCI.
Diversification Opportunities for Schwab International and SPDR MSCI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Schwab and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Schwab International Equity and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI and Schwab International 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 Schwab International Equity are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of Schwab International i.e., Schwab International and SPDR MSCI go up and down completely randomly.
Pair Corralation between Schwab International and SPDR MSCI
Given the investment horizon of 90 days Schwab International Equity is expected to under-perform the SPDR MSCI. In addition to that, Schwab International is 1.02 times more volatile than SPDR MSCI ACWI. It trades about -0.34 of its total potential returns per unit of risk. SPDR MSCI ACWI is currently generating about -0.33 per unit of volatility. If you would invest 2,840 in SPDR MSCI ACWI on January 20, 2024 and sell it today you would lose (119.00) from holding SPDR MSCI ACWI or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Schwab International Equity vs. SPDR MSCI ACWI
Performance |
| Timeline |
| Schwab International |
| SPDR MSCI ACWI |
Schwab International and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab International and SPDR MSCI
The main advantage of trading using opposite Schwab International and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab International position performs unexpectedly, SPDR 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| Schwab International vs. iShares ESG Advanced | Schwab International vs. iShares ESG Advanced | Schwab International vs. iShares ESG MSCI | Schwab International vs. iShares ESG Aware |
| SPDR MSCI vs. iShares ESG Advanced | SPDR MSCI vs. iShares ESG Advanced | SPDR MSCI vs. iShares ESG MSCI | SPDR MSCI vs. iShares ESG Aware |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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