Correlation Analysis
Portfolio Management
Definition
Statistical measurement of how two or more securities or asset classes move in relation to each other, ranging from -1 to +1, essential for portfolio diversification and risk management strategies.
Key Points
- Measures relationship strength between assets
- +1 = perfect positive, -1 = perfect negative
- Low correlations improve diversification
Examples
Stocks and bonds often negatively correlatedGold and dollar typically inverse relationshipQuick Info
Category
Portfolio Management
Related Topics
diversification
portfolio risk
asset allocation
Related Terms
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