Bad News about Correlations in the Markets

FT: 7/23: Investors Face a World of Correlation

Perhaps more startlingly, correlations are even increasing at the level of individual stocks. This week, the Financial Times reported that the correlation between individual US stocks is now higher than it was in the aftermath of the Lehman Brothers debacle, when virtually all stocks were simultaneously marked down. Correlation between the biggest European stocks is also almost perfect.

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