Correlations Flash Warning Signs in Five Major Markets

Correlations Flash Warning Signs in Five Major Markets
1:17
Published on: Jul 23, 2024 8:00:00 AM

EasyAssetManagement says that the recent decline in global equity correlations suggests potential for increased market volatility and weaker returns, particularly in the US, China, Korea, Thailand, and Malaysia.



Global equity correlations plummeted to near-record lows in June, marking the second such instance this year. This means markets are moving less in sync with each other. It's important to note that only five individual markets exhibited correlation levels significantly below their historical averages, compared to eleven in March. These five markets – the US, China, Korea, Thailand, and Malaysia – have historically seen periods of weaker returns following such low correlation readings.

The decline in global correlations was primarily driven by lower correlations within the US and Chinese markets, which together constitute a significant portion of the global equity index. Conversely, France experienced unusually high correlations, a pattern often observed during market panics. India, Mexico, and Saudi Arabia also ended the quarter with elevated correlation levels.

Overall, the recent decline in global equity correlations suggests a potential increase in market volatility and the possibility of weaker returns in the near term.



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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an external contributor as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

 

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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