One of the nice things about ETFs is the broad diversity they offer in terms of exposure to a vast variety of stock sectors within the US — but they also have exposure to a growing number of international countries (and in some cases, multiple choices within a single country or region), commodities, currencies, volatility, bonds, etc.  All of which can be traded in a single brokerage account (or brokerage retirement account).  In general, we tend to look for outperforming and underperforming ETFs for our specific option trades in the ETFTRADR program — as well as non-correlated prices moves, among other factors.

One example of a interesting divergence performance we’ve seen recently is among a few of the different single country ETFs within Asia.  This is just an example, we see divergences and outperformance/underperformance like this occur all the time.

Take a look at the chart below, which depicts the Relative Performance of China ETF (FXI), Thailand ETF (THD), South Korea ETF (EWY) and Malaysia ETF (EWM) since mid-October.  Far from being monolithic, there increasingly over time is diversity among performance in single countries within Asia, Europe, etc.

[FXI is red, THD is purple, EWY is green, EWM is yellow]

FXI vs THD vs EWY vs EWM Since October Market Bottom, Relative Performance Chart

 

Now, all of these ETFs are underperforming the S&P 500 ETF (SPY) over this time frame, we’re not saying this chart is giving a screaming ‘buy’ on any of them.  But it clearly shows you would have done well in  FXI & THD since the October rapid whip reversal, while in EWY or EWM you would be either breaking even or down — and this doesn’t include the leverage we get with option trading strategies.

Here is another example on the chart below, just within Japan ETFs there are divergences going on — over the same time frame, Japan Hedged Equity ETF (DXJ) is strongly outperforming other Japan ETFs such as (EWJ) & (NKY) — but also outperforming the SPYders.