Is Low Implied Correlation a Cause for Concern?

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Nov. 1 (Bloomberg) -- On today's "Chart Attack," Cantor Fitzgerald's Peter Cecchini and Bloomberg's Adam Johnson look at implied correlation. They speak on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Time for "chart attack." we're talking about stocks at a record high as volatility and correlation fall to near record lows.

Should we be concerned?

Peter of cantor fitzgerald.

I believe we should.

Although correlation has been on a downward trajectory, when correlation -- let's bring in the camera and go right to it.

We only have about a minute here.

The s&p, the upper line here in white.

The v.i.x., the fear index, down on the multi-year lows, and a very similar story about correlation also very low.

Why is this combo bad?

Technically what correlation tells you in this case when it's low is implied volatility on stocks indices are high, which makes sense, because correlation tends to be low when the v.i.x. is low.

It indicates a high level of complacency.

A high level of complacency.

Peter, thanks for coming here.

Wish we had more time.

We'll have you back.

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change