Saturday, October 31, 2009

Stock Correlations For September and October 2009: How to Diversify Your Investments

Here are stock and major index correlations for September and October 2009. Correlations are extremely important for proper diversification of investments.

A number close to 1 indicates strong postiive correlation. A value close to -1 indicates strong inverse correlation. A number clsoe to zero indicates assets are uncorrelated.

Please click to enlarge.

The above table is based on an analysis involving all prices between September 1st and October 30.

Most correlated stocks:


- FXA/BZF/EWZ (Australian dollar/Brazilian Real, Brazil ETF)

- FXE/UUP (Euro/USD, inverse)


Least correlated stocks:

These are harder to find, and quite interesting

- USO and UNG (oil and natural gas!)

- USO and IWM (oil and Russel 2000)

- USO and GDX (oil and miners)

- USO and GS (Goldman Sachs, weren't they pumping oil?)

Correlations are dynamic. Past correlation does not indicate future correlation, neither does it indicate causality. However, you can compare with previous values as of the end of Q3 09 and see that typically there are only small changes over time.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool.

Coming up: currency and commodity correlations

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