Re:Insider trading has been rife on Wall Street, academics c...
by hedora on Sunday February 11, 2018 @05:34PM
(#16355211)
I noticed that the stocks that ETFs and stock screening algorithms like moved had much higher correlation with the indexes during last week’s correction.
This is just based on a quick spot check, but I’m worried the passive investment craze has weakened the link between business fundamentals and pricing for the stocks in the most popular indexes.
If so, that increases correlations in the pricing of assets that were explicitly chosen because their prices have no or negative correlation with each other.
This is just based on a quick spot check, but I’m worried the passive investment craze has weakened the link between business fundamentals and pricing for the stocks in the most popular indexes.
If so, that increases correlations in the pricing of assets that were explicitly chosen because their prices have no or negative correlation with each other.