U.S. sector exchange traded funds continue to move as a herd with the “risk on” and “risk off” trades continuing to dictate the market’s direction.
“All or nothing” days in the S&P 500 spiked along with volatility over the summer. In other words, the blue-chip benchmark saw a high number of days when most stocks were either rising or falling together. [Sector ETFs Continue to Move as a Pack]
“Our monthly review of asset price movements finds that correlations are still way too high for comfort,” wrote ConvergEx Group Chief Market Strategist Nicholas Colas in a note Wednesday. [Risk Trade Drives ETFs, Correlations]
Average U.S. industry sector correlations are 95% and have stood near that elevated level for three months. [Sector ETF Correlations Highest Since Financial Crisis]