Monday screencast: correlation comedown

abnormalreturns
January 24th, 2011

Much digital ink has been spilled since the onset of the financial crisis discussing the fact that global markets (and individual stocks) had all been trading in what seemed like lockstep. Depending on whether risk was ‘on’ or ‘off’ markets seemed to be moving to the beat of a single drummer. That effect now seems to have eased. Stocks and sectors have now eased off of their high correlations. The US stock market has seemingly disengaged from the action in the US dollar. In short, it seems like investors have moved past the trauma of the financial crisis and are now focusing on more micro effects. However some analysts believe we are still in a macro-dominated investment environment. In today’s screencast we look at the implications of an easing in the correlation trade.

Items mentioned in the above screencast:

The correlation trade has broken down. (WSJ)

Fund managers are slowly getting over the trauma of the past few years. (Big Picture)

Francois Trahan talks macro market effects with Consuela Mack. (Wealthtrack)

“Eventually markets will return to something approaching a new normal…At that point a new set of skills will be required of today’s macro-themed investors. “ (Abnormal Returns)

Abnormal Returns is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. If you click on my Amazon.com links and buy anything, even something other than the product advertised, I earn a small commission, yet you don't pay any extra. Thank you for your support.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: STUDY