Developed ex-US (EFA) vs Japan (EWJ)
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
Japan is ~20% of EFA, so persistent divergence signals Japan-specific forces (BoJ yield-curve control, yen carry, corporate governance reforms). When EWJ outperforms EFA, Japan-specific reforms or yen weakness benefiting exporters are dominant. When EWJ underperforms, BoJ normalization risk or yen strength pressures exporters.
Cross-Asset Analysis
Before getting to the spread, note what each leg actually represents: EAFE Developed (EFA) is iShares MSCI EAFE ETF, developed markets excluding US and Canada, and Japan / Nikkei (EWJ) is iShares MSCI Japan ETF, proxy for the Nikkei 225 and Japanese equity market. Pairs like EAFE Developed (EFA) and Japan / Nikkei (EWJ) trade tighter than either leg does individually, because the common component is high and the remaining idiosyncratic share is what the pair expresses. Idiosyncratic events in a concentrated peer, such as a single mega-cap earnings miss inside EAFE Developed (EFA), can move the EAFE Developed (EFA)-Japan / Nikkei (EWJ) spread without broader factor signal.
Overlay strategies trade the EAFE Developed (EFA)-Japan / Nikkei (EWJ) spread through options or swaps when the underlying pair is directly tradable, sizing against realized spread volatility. EAFE Developed (EFA) and Japan / Nikkei (EWJ) occupy the same asset class, and the relative performance between them isolates the specific factor that distinguishes one from the other. Late-cycle environments force EAFE Developed (EFA) and Japan / Nikkei (EWJ) to express their respective defensive and cyclical tilts more sharply, making the spread a useful regime tell.
Index construction choices inside EAFE Developed (EFA) and Japan / Nikkei (EWJ), including weighting methodology and inclusion rules, create persistent tilts that show up in the spread. Sector, style, and geographic dominance cycles each produce multi-year relative performance episodes between EAFE Developed (EFA) and Japan / Nikkei (EWJ).
90-Day Statistics
No data available
No data available
Explore Each Metric
Related Scenarios & Forecasts
Get daily macro analysis comparing key metrics delivered to your inbox. Stay ahead of market-moving divergences.
Frequently Asked Questions
What is the relationship between EAFE Developed (EFA) and Japan / Nikkei (EWJ)?+
EAFE Developed (EFA) and Japan / Nikkei (EWJ) are connected through shared asset class exposure with different factor tilts. When the underlying asset class shifts, both respond, though with different sensitivities and at different speeds. The spread between EAFE Developed (EFA) and Japan / Nikkei (EWJ) captures the specific macro signal that flows through this relationship.
When does EAFE Developed (EFA) typically lead Japan / Nikkei (EWJ)?+
EAFE Developed (EFA) tends to lead Japan / Nikkei (EWJ) during rotation episodes between the two factor exposures. In those periods, moves in EAFE Developed (EFA) precede corresponding moves in Japan / Nikkei (EWJ) by days to weeks, depending on the transmission channel and the depth of each market.
How are EAFE Developed (EFA) and Japan / Nikkei (EWJ) historically correlated?+
Long-run correlation between EAFE Developed (EFA) and Japan / Nikkei (EWJ) varies by regime. Peers in the same asset class are highly correlated in direction, with the spread reflecting factor tilts and rotation dynamics. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the EAFE Developed (EFA)-Japan / Nikkei (EWJ) relationship.
What macro conditions drive divergence between EAFE Developed (EFA) and Japan / Nikkei (EWJ)?+
Divergence between EAFE Developed (EFA) and Japan / Nikkei (EWJ) typically arises from index reconstitution, mega-cap earnings surprises, or liquidity differences between the peers. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in EAFE Developed (EFA) or Japan / Nikkei (EWJ).
Is EAFE Developed (EFA) a hedge for Japan / Nikkei (EWJ)?+
Peers like EAFE Developed (EFA) and Japan / Nikkei (EWJ) do not hedge each other; both rise or fall with the shared asset class, and using the pair as a spread trade is different from using it as a hedge. Effective hedging requires matching the hedge to the specific risk being protected, and the EAFE Developed (EFA)-Japan / Nikkei (EWJ) pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
Related Comparisons
Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.