Statistical measure of how two assets move relative to each other (-1 to +1).
+1: move perfectly together. 0: independent. -1: move opposite. Diversification benefits maximized with low or negative correlations. Stock-bond correlation has flipped from negative (helpful for 60/40) to positive (less helpful) in inflation-driven environments.
Statistical measure of how two assets move relative to each other (-1 to +1). +1: move perfectly together. 0: independent. -1: move opposite. Diversification benefits maximized with low or negative correlations. Stock-bond correlation has flipped from negative (helpful for 60/40) to positive (less helpful) in inflation-driven environments.
In risk, Correlation is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
+1: move perfectly together. 0: independent.
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