Highest Single Stock Correlation with S&P500 Since ’87

July 13, 2010 12:00pm by Barry Ritholtz

Is Alpha becoming Beta?

That seems to be the case lately, with a very high correlation between stocks.The WSJ noted the sync between individual names in Component Stocks’ Correlation to S&P 500 at Highest Level Since ‘87 Crash.

Hence, it is not really a “stock pickers market,” as so many know-nothing pundits are trying to tell you.

Jim Bianco blames “Macro Investing” — between ETFs, program trading, and other factors, this leads to increasing degrees of correlation.

I think its more of a sign of indecision, and traders sitting on their hands.

Here is Jim’s chart, showing the correlation between 6 other markets that are trading like SPX:

click for bigger chart

chart courtesy of Bianco Research

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