Over the past year we’ve published many stories detailing the rising correlations in markets in the wake of the 2008 financial meltdown.
Higher correlations in exchange traded funds tracking various asset classes emphasize the uncertainty and fear in financial markets. The latest news headlines out of Europe on the debt crisis can lead to dramatic swings in the market as a result of the so-called risk-on and risk-off trades.
In U.S. equities, the tendency of S&P 500 stocks to move as a herd recently highlights the trend.
Global stock ETFs took a nosedive Tuesday after Greece’s proposal for a referendum to the new bailout plan caught markets by surprise. [ETFs Stumble Into November]
With the latest plunge, the S&P 500 has broken the record set in 2008 for the most “all-or-nothing days” in a single year, according to Bespoke Investment Group. [Sector ETFs Continue to Move as a Pack]