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Shining a light on correlation
Collidr Research
Shining a light on correlation
If you’re worried about the current market, perhaps you don’t have to turn far? It isn’t necessarily about finding the perfect sector to rotate into (for sector concentration, to be shown later, can lead to worse outcomes relative to holding equities from a broader variety of sectors). Often you can increase your chances for outperformance by sticking to the members of an index that aren’t following the crowd so closely, so to speak. These equities, which may be forging their own path and doing something a bit more esoteric, can be found by using one of the humblest tools in the statistician’s toolbox: correlation.