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The high degree of correlation we've seen among stocks lately may just be a matter of heightened...

The high degree of correlation we've seen among stocks lately may just be a matter of heightened volatility creating a statistical anomaly, suggests Mark Hulbert, rather than any real paradigm shift for the markets. The dual combination of increased volatility in a down market skews the data to create the false appearance of a "one stock market," Hulbert says, rather than what we actually have, which is a diverse "market of stocks." (video)
Comments (3)
  • Machiavelli999
    , contributor
    Comments (828) | Send Message
    It's simple than that. Usually individual stock movements are driven by fundamentals. They are now driven by macro policy decisions of various governments.
    1 Nov 2011, 08:02 PM Reply Like
  • SivBum
    , contributor
    Comments (2238) | Send Message
    May be it is simply all those ETFs and computers making up all the trades.
    1 Nov 2011, 08:26 PM Reply Like
  • alpharox
    , contributor
    Comments (380) | Send Message
    This is in large part due to the automation of the markets.


    30 years ago when few people had brokerage accounts and no one had the internet, you had to call your broker after you read about news in the paper the next day.


    Now everyone is executing trades online in seconds and everyone has the same news feeds available, with few exceptions. Once something breaks into the mass media, everyone is trading on it the same way, hence the correlation that leads to so much volatility. I don't see this changing.
    1 Nov 2011, 08:34 PM Reply Like
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