Portfolio diversification is measured not by the number of holdings but by their correlation. Adding a Canadian equity ETF (EWC, 0.78 five-year correlation to SPY) to a US equity portfolio provides almost no diversification benefit — the two markets move in near-lockstep. Adding a Turkish equity ETF (TUR, 0.25 five-year correlation to SPY) provides genuine portfolio-level risk reduction.

The table below covers all 43 country ETFs tracked by CountryETFTracker, ranked by 5-year correlation to SPY from lowest to highest, with data across five timeframes: 3 months, 6 months, 1 year, 3 years and 5 years. The full interactive version is at countryetftracker.com/CorrelationMatrix.

The Complete Correlation Ranking vs SPY — All 5 Timeframe

ETF	Country	3M	6M	1Y	3Y	5Y
TUR	🇹🇷 Turkey	0.51	0.40	0.38	0.23	0.25
QAT	🇶🇦 Qatar	0.43	0.44	0.39	0.37	0.30
KWT	🇰🇼 Kuwait	0.32	0.28	0.34	0.37	0.36
VNM	🇻🇳 Vietnam	0.52	0.34	0.52	0.43	0.38
GXC	🇨🇳 China	0.68	0.62	0.59	0.37	0.38
UAE	🇦🇪 UAE	0.59	0.51	0.53	0.46	0.38
COLO	🇨🇴 Colombia	0.39	0.36	0.45	0.43	0.41
EWZ	🇧🇷 Brazil	0.67	0.57	0.52	0.47	0.42
EWH	🇭🇰 Hong Kong	0.70	0.66	0.58	0.44	0.43
KSA	🇸🇦 Saudi Arabia	0.57	0.48	0.50	0.49	0.43
EIDO	🇮🇩 Indonesia	0.41	0.39	0.46	0.41	0.44
ECH	🇨🇱 Chile	0.61	0.58	0.54	0.47	0.45
EPU	🇵🇪 Peru	0.62	0.62	0.51	0.51	0.47
THD	🇹🇭 Thailand	0.46	0.40	0.52	0.47	0.50
EWM	🇲🇾 Malaysia	0.62	0.62	0.52	0.49	0.50
EWW	🇲🇽 Mexico	0.63	0.56	0.53	0.47	0.52
ENZL	🇳🇿 New Zealand	0.52	0.53	0.45	0.49	0.54
EZA	🇿🇦 South Africa	0.67	0.59	0.53	0.52	0.54
GREK	🇬🇷 Greece	0.61	0.54	0.50	0.46	0.55
INDA	🇮🇳 India	0.72	0.58	0.49	0.49	0.56
ARGT	🇦🇷 Argentina	0.64	0.53	0.47	0.49	0.57
EPOL	🇵🇱 Poland	0.73	0.63	0.62	0.54	0.59
ENOR	🇳🇴 Norway	0.40	0.41	0.56	0.55	0.61
EWO	🇦🇹 Austria	0.70	0.66	0.67	0.58	0.61
EWY	🇰🇷 South Korea	0.66	0.64	0.56	0.59	0.61
EDEN	🇩🇰 Denmark	0.70	0.67	0.55	0.55	0.62
EWP	🇪🇸 Spain	0.77	0.70	0.65	0.54	0.63
EWK	🇧🇪 Belgium	0.69	0.61	0.53	0.50	0.63
EWT	🇹🇼 Taiwan	0.78	0.75	0.72	0.69	0.64
EWL	🇨🇭 Switzerland	0.61	0.54	0.54	0.52	0.64
EFNL	🇫🇮 Finland	0.80	0.70	0.61	0.56	0.64
EWS	🇸🇬 Singapore	0.64	0.63	0.71	0.64	0.65
EWU	🇬🇧 United Kingdom	0.78	0.71	0.66	0.63	0.67
EWI	🇮🇹 Italy	0.76	0.69	0.72	0.63	0.69
EWJ	🇯🇵 Japan	0.75	0.69	0.69	0.67	0.70
EWQ	🇫🇷 France	0.77	0.68	0.71	0.62	0.70
EIS	🇮🇱 Israel	0.64	0.66	0.61	0.61	0.70
EIRL	🇮🇪 Ireland	0.75	0.69	0.70	0.63	0.71
EWD	🇸🇪 Sweden	0.80	0.75	0.68	0.64	0.71
EWG	🇩🇪 Germany	0.80	0.77	0.75	0.67	0.72
EWA	🇦🇺 Australia	0.75	0.73	0.75	0.72	0.75
EWC	🇨🇦 Canada	0.70	0.71	0.72	0.74	0.78
EWN	🇳🇱 Netherlands	0.89	0.80	0.80	0.75	0.80

Updated April 12–13, 2026. Full interactive matrix: countryetftracker.com/CorrelationMatrix.

Correlation Analysis: INDA vs SPY

First ETF

Second ETF

Correlation

Highest Correlation

Lowest Correlation

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Four Patterns the Multi-Timeframe Data Reveal

Reading correlation across five timeframes rather than a single number is the difference between understanding structure and reading noise. The complete dataset reveals four distinct patterns.

Pattern 1: Structurally Stable Low — Kuwait (KWT

)

Kuwait is the most consistently low-correlation country ETF in the universe:

KWT: 3M: 0.32 → 6M: 0.28 → 1Y: 0.34 → 3Y: 0.37 → 5Y: 0.36

The entire range across five timeframes is only 0.09 — the tightest band in the dataset. Kuwait's correlation never exceeds 0.37 at any horizon. This is the definition of structurally reliable diversification: the low correlation reflects genuine economic decoupling, not a period-specific coincidence. Kuwait's equity market is dominated by Kuwait Finance House (22.9% of index weight) and other Islamic finance institutions, whose earnings are driven by domestic credit conditions and oil royalty flows — structurally uncorrelated with the US technology sector and Fed rate policy that dominate SPY movement.

Qatar (QAT) shares similar stability: 3M: 0.43, 6M: 0.44, 1Y: 0.39, 3Y: 0.37, 5Y: 0.30. The range is 0.14. Qatar's market is driven by LNG prices and QNB Group domestic banking — again structurally independent of US equity drivers.

Pattern 2: Low Long-Run, Surging Short-Run — China (GXC

)

China shows the widest spread between long-run and short-run correlation in the entire universe:

GXC: 3M: 0.68 → 6M: 0.62 → 1Y: 0.59 → 3Y: 0.37 → 5Y: 0.38

The 5-year correlation of 0.38 places GXC in the lowest tier. But the 3-month correlation is 0.68 — near the developed European market average. This is not random variation. Chinese technology companies (Tencent, Alibaba, Meituan) have become increasingly subject to global risk sentiment, US export controls and Taiwan geopolitical premium — factors that move in tandem with SPY. The 5-year average masks a correlation that has been rising structurally for two years.

Portfolio implication: Using GXC's 5-year correlation of 0.38 to justify diversification benefit is analytically misleading in 2026. The operative figure for current portfolio construction is closer to 0.60–0.68.

The same pattern appears in Vietnam (VNM): 5Y: 0.38, but 3M: 0.52 and 1Y: 0.52 — as Samsung, Intel and NVIDIA manufacturing operations integrate Vietnam more tightly into the global technology supply chain.

Pattern 3: War-Driven Decoupling — ENO

Norway (ENOR) shows dramatically lower short-horizon correlations than its long-run average — the reverse of the typical pattern:

ENOR: 3M: 0.40 → 6M: 0.41 → 1Y: 0.56 → 3Y: 0.55 → 5Y: 0.61

The 3-month and 6-month correlations (0.40–0.41) are more than 20 points below the 5-year average (0.61). During the Iran war, ENOR gained +28.80% YTD while global equities fell — oil above $100 is simultaneously bearish for SPY (via rate hike fears and input cost compression) and bullish for ENOR (via Equinor revenue). The war created a conditional negative correlation between SPY and ENOR that the 5-year average does not capture. ENOR is a macro hedge, not a conventional diversifier.

Pattern 4: Stress Convergence — European Developed Market

Most European country ETFs show higher 3-month correlations than 5-year averages — the classic correlation spike in crisis:

ETF	3M	5Y
EWN (Netherlands)	0.89	0.80
EWG (Germany)	0.80	0.72
EFNL (Finland)	0.80	0.64
EWD (Sweden)	0.80	0.71
EWP (Spain)	0.77	0.63

During the March 2026 stress period, European equities moved tightly with the S&P 500 — both markets were simultaneously pricing the same oil shock, rate hike risk and geopolitical uncertainty. The diversification that European allocations provide in normal conditions effectively disappeared at precisely the moment it was most needed.

Deep Dive: The Best Diversifier

Turkey (TUR) — 5Y: 0.25, 3Y: 0.2

The iShares MSCI Turkey ETF (TUR) has the lowest 5-year and 3-year correlation in the universe. Turkey's market is dominated by domestic banks (Akbank, Garanti BBVA, İşbank), retailers (BIM, Migros), aerospace/defence (ASELSAN, 12.6% of index) and refiners (Tüpraş). Earnings are denominated in Turkish lira and driven by domestic demand, TCMB monetary policy and Turkish inflation — structurally uncorrelated with Fed decisions or Nvidia's quarterly results.

The 3-month correlation of 0.51 — the highest of TUR's five timeframes — reflects the Iran war increasing Turkey's near-term co-movement with global risk sentiment. The structural long-run driver of low correlation remains intact. TUR is +22.25% YTD and trades at 6.65x forward P/E, the deepest absolute valuation in the country ETF universe.

Qatar (QAT) — 5Y: 0.30, most stable below 0.4

Qatar's correlation is the second-lowest at every timeframe, never exceeding 0.44. Qatar's LNG-export economy and QNB Group domestic banking system operate on fundamentally different drivers from the US technology sector. Dividend yield: 3.47% — income alongside diversification.

Colombia (COLO) — 5Y: 0.41, range 0.36–0.4

The Global X MSCI Colombia ETF (COLO) is the most consistent low-correlation large-EM equity ETF: 3M: 0.39, 6M: 0.36, 1Y: 0.45, 3Y: 0.43, 5Y: 0.41. No timeframe exceeds 0.45. Colombia's equity market is driven by Bancolombia, Ecopetrol and domestic utilities — earnings in Colombian pesos with minimal US tech sector overlap. COLO is +15.18% YTD, demonstrating that low correlation does not imply low returns.

Norway (ENOR) — A Macro Hedge, Not a Conventional Diversifie

As discussed in Pattern 3, ENOR's 5-year correlation of 0.61 would normally exclude it from this list. Its inclusion is justified by a structural property: ENOR has conditional negative correlation with SPY during oil shock regimes — rising when SPY falls on rate hike fears triggered by high oil. This makes it analytically different from a conventional diversifier and more comparable to a macro hedge instrument within a country ETF wrapper.

The Highest-Correlation ETFs: Where Diversification Is Minima

ETF	Country	3M	6M	1Y	3Y	5Y
EWN	🇳🇱 Netherlands	0.89	0.80	0.80	0.75	0.80
EWC	🇨🇦 Canada	0.70	0.71	0.72	0.74	0.78
EWA	🇦🇺 Australia	0.75	0.73	0.75	0.72	0.75
EWG	🇩🇪 Germany	0.80	0.77	0.75	0.67	0.72
EWD	🇸🇪 Sweden	0.80	0.75	0.68	0.64	0.71

Netherlands (EWN) at 0.89 three-month correlation moves in near-lockstep with SPY, driven by ASML and other technology-cycle companies with deep US revenue exposure. Canada (EWC) at 0.78 reflects the deeply integrated US-Canada trade relationship — approximately 75% of Canadian exports go to the United States.

Portfolio Construction Framewor

The correlation data supports a tiered approach to international allocation:

Tier 1 — Structural diversifiers (5Y < 0.45, stable across timeframes): TUR, QAT, KWT, COLO, EIDO. These provide regime-independent diversification. Appropriate as 5–10% satellite positions.

Tier 2 — Conditional diversifiers (specific macro triggers create decoupling): ENOR in oil shocks, EWZ when commodities diverge from US equities, GREK driven by European banking cycle. Allocate tactically based on the macro regime.

Tier 3 — Directional only (5Y > 0.65): Most European country ETFs, Japan, Singapore, Taiwan. These provide currency diversification and valuation access but minimal equity correlation diversification. Their value lies in cheaper valuations (EWG at 13.7x P/E vs SPY at 19.96x), not in lowering portfolio volatility.

The complete interactive matrix is at countryetftracker.com/CorrelationMatrix.

Frequently Asked Question

Which country ETF has the lowest correlation to the S&P 500?

Turkey (TUR) has the lowest 5-year correlation at 0.25 and the lowest 3-year correlation at 0.23. Qatar (QAT) is second at 0.30 over five years. Kuwait (KWT) at 0.36 is the most stable across all five timeframes, never exceeding 0.37 at any horizon. Data as of April 12–13, 2026.

Why does Kuwait have such stable low correlation across all timeframes?

Kuwait's equity market is dominated by Islamic finance institutions (Kuwait Finance House, 22.9% of index weight) with earnings driven by domestic Kuwaiti credit conditions and oil royalty flows. These structural factors are essentially uncorrelated with the US technology sector and Fed rate decisions that dominate SPY movement. Kuwait's correlation range across all five timeframes is only 0.09 — the tightest in the dataset.

Why has China's (GXC) short-term correlation risen so much above its 5-year average?

GXC's 5-year correlation is 0.38 but its 3-month correlation is 0.68. Chinese technology companies (Tencent, Alibaba) have become increasingly subject to US export controls, Taiwan geopolitical risk and global risk sentiment — factors that correlate with SPY movement. The 5-year figure masks a structural upward trend that makes GXC less diversifying today than its historical average implies.

Why does Norway (ENOR) appear in the analysis despite a 0.61 five-year correlation?

ENOR's 3-month and 6-month correlations are only 0.40–0.41 because the Iran war created a decoupling: oil above $100 pressures SPY through rate hike fears while simultaneously lifting ENOR via Equinor revenue. ENOR has conditional negative correlation with SPY during oil shock regimes — making it analytically distinct from a conventional diversifier.

Where can I see the full correlation matrix?

The complete interactive matrix — all 43 country ETFs against SPY across all five timeframes — is at countryetftracker.com/CorrelationMatrix.

Which Country ETFs Have the Lowest Correlation to the S&P 500?