The correlation among stocks is a good indication whether equity markets are being driven by macro factors or stock specific factors.If correlation is high among stocks, it will usually indicate that there is a strong common factor that is driving the market. If correlation is low, then there is less likely to be a common factor and more local or firms specific factors will be driving stocks. In that case, it would be a better market for stock-pickers. Right now we are in a stock-picker's dream environment.
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