Oct. 13 (Bloomberg) -- U.S. stocks and the dollar are moving in the opposite direction more than ever before as a weaker currency boosts the value of sales outside America.

The CHART OF THE DAY shows that the so-called correlation coefficient using 120 days of data between the Dollar Index and the Standard & Poor’s 500 Index is minus 0.43, near the level of minus 0.45 reached on July 7. The reading three months ago was the lowest in the currency gauge’s 42-year history.

“When the dollar drops, that’s good for companies that are making products in the U.S. and selling them abroad,” said Frederic Dickson, who manages $20 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. “Investors are expecting U.S. multinational companies to have positive earnings surprises as a result of the dropping dollar.”

Companies in the S&P 500 generated 47.9 percent of their revenue outside the U.S. in 2008, an increase from 43.6 percent in 2006, according to data compiled by S&P. The stock measure has surged 59 percent from a 12-year low on March 9. The Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 14 percent during the same period, including the steepest two- quarter drop since 1991.

The correlation between stocks and the dollar turned positive in March 2008 and peaked at 0.46 a year ago as investors sold American stocks and the greenback on concern the credit crisis would sap returns on U.S. assets. That relationship deteriorated in September 2008 as investors parked assets in the dollar and Treasuries to weather the global recession. A correlation coefficient of minus 1 means two assets are moving exactly the same percent in opposite directions.

The falling dollar also “helps stocks because you have gold, oil, copper and steel companies moving up as money flows and the commodity prices move up,” Dickson said.

To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Oliver Biggadike in New York at obiggadike@bloomberg.net.

Last Updated: October 13, 2009 00:01 EDT