TSE AORD April 7

One would intuitively expect diversification to work better over a greater distance, like from Canada to Australia. Not so in this example as language, common heritage, natural resource dependence and a few other factors conspire to make the two economies, at least their stock exchanges, operate in almost identical fashion. Here are the charts of the and the AORD.

TSE April 7

AORD April 7

Notice that the TSE, the top one, starts later and therefore misses a wave that the AORD does have; otherwise the two are more or less identical. Something is distorting these indexes to cause this difference, perhaps capital weights, total return , whatever is responsible. To avoid this we will use the EWC and EWA iShares instead. Here they are.

ewc april 7

ewa april 7

Both iShares are pretty well identical having lost about the same proportion and doing it in synch. Both also suggest a 5th wave is missing to take them to their logical targets! In the future we will avoid the index and use the iShare instead.