Japan (EWJ) outperforms as Coronavirus cases are low (due to low testing), but country now on the verge of a massive virus outbreak, in line w/ EU & US. Italy (EWI) lags DM, seen as new epicenter of Coronavirus. Country on lockdown, virus priced in (relative to Japan).
Italy also has sov debt & banking crisis overhang- but Japan also has massive sov debt & banking crisis, just not as widely publicized.
Banking/debt crisis aside, strictly from coming Coronavirus data reaction, RELATIVE pair trade: Short EWJ (Japan) / Long EWI (Italy)
ETFs are FX hedged to mitigate some of USD vol interference.