As economies in the Asia-Pacific region continue to grow and integrate into the global market, understanding the potential benefits of the S&P 500 Index has become increasingly important. Comprising the 500 largest publicly traded companies in the U.S., the S&P 500 Index not only holds significant weight in the U.S. economy but also serves as a crucial barometer of global market trends.

Low Correlation with Asia-Pacific Markets: Why It Matters

One key reason the S&P 500 Index is vital to the Asia-Pacific region is its low correlation. Diversifying investments in regions with low correlation can help reduce overall risk and volatility.

The Correlation Between the S&P 500 Index and Asia-Pacific Markets

Correlation measures the degree to which two assets move in relation to each other². When markets exhibit low or even negative correlation, it helps mitigate risk because a downturn in one market does not necessarily affect the other³. Based on historical data over a five-year study period, the daily correlation between the S&P 500 Index and various Asia-Pacific markets ranged from 0.10 to 0.45⁴.