Correlation | August 9, 2017

Category: Quant Insight

Correlations are on the rise in nearly every asset class. We think this is likely due to the reemergence of interest rates and inflation as a core driver of market returns. Rates in the U.S. continued their decline this past week which may lead most investors to ignore any potential inflation risks on the horizon.

The correlation figure measures how each asset return moves in relationship to the broader basket of asset returns listed on the X axis. When correlation ns are high or rising, it may indicate that economic movements and sentiment are driving the majority of returns, which could potentially make security selection challenging.

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