Category: Quant Insight

Correlations among all asset classes are low and going lower. As mentioned before, this puts a damper on any major macro themes. However, would be in direct contradiction with the increase in rates and inflation, so we should expect to see rising correlation especially in inflation sensitive areas of the market.

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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