Simply put, stock correlations measure the contemporaneous movement among stocks and explain why
stocks move in different directions.
The likelihood of that is very low given that
each stock moves in a different direction on different days to different degrees.
Not exact matches
To build a diversified portfolio, an investor generally would select a mix of global
stocks and bonds based on his or her individual goals, risk tolerance and investment timeline.2 The chart below highlights how those broad asset classes have
moved in different directions over the past 20 years.
Having
stocks, bonds and gold rise
in tandem is likely a short term phenomenon since these asset prices usually
move in different directions.
A de-correlation
in stocks basically means that individual
stocks began
moving in different directions at
different times, rather than
in the same
direction at the same time.
Here is the one asset class that may even
move in a
different direction than the majority of other assets (e.g., domestic bonds, domestic
stocks, international
stocks or high - flying commodities, etc.).
For now, credit risks are likely to be of concern to investors until the economy gains a better footing, and these risks can
move stocks and bonds
in different directions.
Often but not always, the
stock and bond markets
move in different directions: the bond market rises when the
stock market falls and vice versa.
Buying an option is like buying protection against a
stock (aka equity)
moving in a
direction, up or down, that is
different than what you planned.
Bonds often
move in a
different direction than do
stocks.
Since there are
different types of orders
in the Forex market that would permit you to be more specific on how you want your traders to carry out your trades like whether you should place a stop or a limit order, you are entitled to command your broker about your prerogative to refuse the market price and instead you want to
move your
stock price
in a particular
direction before you execute your order.