Do stock market correlations matter?
Statisticians use correlations (or cross-correlation) to measure the relationship between asset classes or investments. The general idea is to better understand the similarity or dissimilarity in how investments perform against each other and to build a portfolio of investments that can benefit.
The CBOE S&P 500 Implied Correlation Index (ChicagoOptions:^KCJ) also known as the “ICI”
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The financial services industry’s bias toward long-term investing as the magic formula to the problems that face the individual investor is wrong and misleading.
For example, illustrating unrealistic long-term time horizons of 100 or 200 years of equity returns (NYSEARCA:VTI) to prove that we should all be long-term investors is a common practice among both academicians and the financial advisor community.
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