Home Breadcrumb caret Economy Breadcrumb caret Economic Indicators Breadcrumb caret Investments Breadcrumb caret Market Insights How market volatility affects correlations The relationships between stocks aren’t typically altered by market volatility. By Staff | April 21, 2015 | Last updated on April 21, 2015 2 min read Despite market volatility, the relationships between stocks typically remain persistent, says Adrian Banner, CEO and CIO at Intech Investment Management, and manager of the Renaissance U.S. Equity Fund. Listen to the full podcast on AdvisorToGo. And, he notes, this fact holds true even during major market downturns. “The financial crisis was a big turning point in markets — certainly a lot of conventional wisdoms were overturned. Nonetheless, there were a number of relationships that held up.” Read: How to thrive during market downturns Is it getting harder to find alpha? For instance, let’s say stock A is more volatile than stock B in a calm market. If the volatility of both stocks increases during a crisis, stock A should still be more volatile than stock B. Read: How to advise clients who embrace risk 3 reasons markets are volatile Banner explains, “Our strategy is we’re always looking to measure what’s present, and not assume anything about volatilities. [Still], we haven’t had to adjust how we measure the relative correlations and volatilities between stocks.” His firm studies volatility, “not just as a source of risk, but also as a source of reward.” So he measures how stocks behave relative one another, as well as relative to benchmarks such as the S&P500, before making investment decisions. Read: Investment trends to watch How whole life insurance withstands market turns Canadians aren’t protecting portfolios from volatility The case for global bonds in a low-yield world When it’s good to be naïve about risk Will global markets outpace the U.S.? Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo