Correlation Between SPDR Portfolio and Morningstar International

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

By analyzing existing cross correlation between SPDR Portfolio Intermediate and Morningstar International Equity, you can compare the effects of market volatilities on SPDR Portfolio and Morningstar International 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 Portfolio with a short position of Morningstar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Morningstar International.

Diversification Opportunities for SPDR Portfolio and Morningstar International

-0.12

Correlation Coefficient

SPDR Portfolio  Morningstar International

Good diversification

The 3 months correlation between SPDR and Morningstar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Intermediate and Morningstar International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar International and SPDR Portfolio 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 Portfolio Intermediate are associated (or correlated) with Morningstar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar International has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Morningstar International go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Morningstar International

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 6.18 times less return on investment than Morningstar International. But when comparing it to its historical volatility, SPDR Portfolio Intermediate is 4.5 times less risky than Morningstar International. It trades about 0.05 of its potential returns per unit of risk. Morningstar International Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,045  in Morningstar International Equity on February 27, 2025 and sell it today you would earn a total of  61.00  from holding Morningstar International Equity or generate 5.84% return on investment over 90 days.

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

SPDR Portfolio Intermediate  vs.  Morningstar International Equi

SPDR Portfolio Inter

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio Intermediate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, SPDR Portfolio is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Morningstar International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Morningstar International Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Morningstar International may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with SPDR Portfolio and Morningstar International

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

The idea behind SPDR Portfolio Intermediate and Morningstar International Equity 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 CEOs Directory module to screen CEOs from public companies around the world.