Correlation Between SPDR MSCI and First Trust

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

Diversification Opportunities for SPDR MSCI and First Trust

-0.25

Correlation Coefficient

SPDR MSCI  First Trust

Very good diversification

The 3 months correlation between SPDR and First is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI Emerging and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dorsey has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and First Trust go up and down completely randomly.

Pair Corralation between SPDR MSCI and First Trust

Given the investment horizon of 90 days SPDR MSCI Emerging is expected to generate 1.68 times more return on investment than First Trust. However, SPDR MSCI is 1.68 times more volatile than First Trust Dorsey. It trades about 0.17 of its potential returns per unit of risk. First Trust Dorsey is currently generating about 0.01 per unit of risk. If you would invest  3,848  in SPDR MSCI Emerging on August 11, 2025 and sell it today you would earn a total of  417.00  from holding SPDR MSCI Emerging or generate 10.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPDR MSCI Emerging  vs.  First Trust Dorsey

SPDR MSCI Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI Emerging are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, SPDR MSCI may actually be approaching a critical reversion point that can send shares even higher in December 2025.

First Trust Dorsey

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Dorsey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, First Trust is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SPDR MSCI and First Trust

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

The idea behind SPDR MSCI Emerging and First Trust Dorsey 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.