Correlation

Category: Quant Insight

Correlations among equities is rising, likely signaling a reboot of the reflation theme that drove the market through much of 2017. Note that correlations for commodities still remain low and may provide investors with some good diversification as well as a positive trend.

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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