Stock-picking has been a lot easier this year. Decoupled correlations have allowed good equity managers to generate alpha as movements in equity prices have become more responsive to company fundamentals as opposed to risk-on/risk-off market regimes.
Examining the average correlation between the members of the S&P 500 index reveals that stocks began decoupling in July of 2012 (Figure 1).
The data shows that prior to July 2008 average equity correlations maintained a tame level in the range of 0.1
The week on Risk.net, July 14–20, 2017Receive this by email