Category: Quant Insight

Consistent with the pull back in stocks, correlations decreased slightly as the macro theme of inflation and rates took a breather. This may be an opportunity to allocate in the event of a rally, so investors should expect correlations to increase through the end of the year.

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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