The Japanese market (EWJ) has low correlation to the U.S. market (SPY) and the Europe and Far East Index (EFA). It could be a good way to diversify away from a stock allocation that is primarily SPY and EFA. The table above shows the one year correlations (based on daily closing data) between various index ETFs.
The small capitalization Japan ETF (JSC) has very low correlation to SPY and EFA and negative correlation to most of the smaller markets shown. Interestingly, the Irish market (IRL) has correlations very similar to JSC. The Japanese and Irish markets have each just experienced a down year, so now might be the time to consider a small allocation to these markets.
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