Correlation

Category: Quant Insight

Correlation among asset classes has increased substantially over the short-term. The most notable is the positive correlation between bonds and stocks. We believe this is important when considering assets to provide diversification in a correction going forward.

The correlation figure measures how each asset return moves in relationship to the broader basket of asset returns listed on the X axis. When correlations 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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