Sunday, January 3, 2010

Proper Diversification in 2010 Through Global ETFs

As another month ended, we computed the correlations of the global ETFs and ETNs that trade in the U.S. during Q4 2009. We track these ETFs live here.

Correlation is crucial for proper diversification. You do not want highly correlated stocks, either positively or negatively.

The chart below is color-coded. Red and green indicate high correlations. Bold face indicate lack of correlation (good).

(please click to enlarge)

There are lots of choices for diversification. These were some of the global ETF that were not correlated:

  • (Japan and Canada), and EWI
  • EWI (Italy) and ECH (Chile) and EIS (Israel)
  • BRF (Brazil small cap) and EWO (Austria)
  • EWJ and EWC
  • EWO and EWS (Singapore)
  • EWW (Mexico) and EWS
  • HAO (China) and EWO, and EWI
  • PJO (Japan) and EWO, EWO, EWY (South Korea), EZA (South Africa), THD (Thailand), TUR (Turkey)
  • SCJ (Japan), and EWP (Spain), and EZA, TUR
  • EWD (Sweden) and THD, TUR

We will be looking very shortly at the top global ETFs for 2010 as well, please stay tuned.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due dilligence.

These are the ETF names:

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