Correlation Between Invesco FTSE and SPDR MSCI

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

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

Diversification Opportunities for Invesco FTSE and SPDR MSCI

0.89

Correlation Coefficient

Invesco FTSE  SPDR MSCI

Very poor diversification

The 3 months correlation between Invesco and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI 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 Invesco FTSE 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 Invesco FTSE RAFI 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 Invesco FTSE i.e., Invesco FTSE and SPDR MSCI go up and down completely randomly.

Pair Corralation between Invesco FTSE and SPDR MSCI

Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 0.98 times more return on investment than SPDR MSCI. However, Invesco FTSE RAFI is 1.02 times less risky than SPDR MSCI. It trades about 0.15 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.11 per unit of risk. If you would invest  6,123  in Invesco FTSE RAFI on September 13, 2025 and sell it today you would earn a total of  427.00  from holding Invesco FTSE RAFI or generate 6.97% return on investment over 90 days.

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

Invesco FTSE RAFI  vs.  SPDR MSCI ACWI

Invesco FTSE RAFI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco FTSE RAFI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Invesco FTSE may actually be approaching a critical reversion point that can send shares even higher in January 2026.

SPDR MSCI ACWI

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI ACWI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, SPDR MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco FTSE and SPDR MSCI

The main advantage of trading using opposite Invesco FTSE and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE 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.

The idea behind Invesco FTSE RAFI and SPDR MSCI ACWI 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.