Proper stock diversification with global ETFs

The table below shows the correlations of all country and global ETFs (tracked live here) for the period December 2009 and January 2010.

While many investors wish to diversify from the US dollar and into foreign markets, it is very important that investors look at the correlations between what they are buying. Correlations are a great tool for  diversification.

(please click to enlarge)

Those pairs shaded in green and red should be avoided. The best uncorrelated pairs are shared in light yellow with blue text. There are many great pairs and some very exotic combinations:

• FXI and EIS and IDX
• PJO and EWI
• EWP and EWJ
• ECH and EWG and EWK
• GXC and EWJ
• TUR and BRF

These are the ETF names and their average daily trading volumes: