Securities Correlation

[ BACK ]

Financial glossary Financial glossary

Two securities correlate if their price development occurs in opposite directions, i.e. if the price of one rises and the other falls. The correlation is assigned a value of -1 (perfectly correlated) or +1 (no correlation).

Creating a portfolio of correlated securities makes it possible to absorb market fluctuations and makes diversification more effective by reducing investment risk.

MoneyController also suggests