Correlation
InvestingDefinition
Statistical measure of how two assets move together. Range: -1 (perfectly inverse) to +1 (perfectly together). Foundation of diversification.
Correlations are unstable: stocks/bonds correlation flipped from positive (1970s) to negative (2000-2020) to positive again (2022). Stress correlations rise toward 1 in crashes ("flight to cash").
Correlations are unstable: stocks/bonds correlation flipped from positive (1970s) to negative (2000-2020) to positive again (2022). Stress correlations rise toward 1 in crashes ("flight to cash").
Related tool
Open the correlation tool on Arsenal.finance →