S&P 500 correlation with equal-weight index falls to 35-year low, Europe Capital Partners says
SPY•The S&P 500’s correlation with its equal-weight counterpart fell to 0.38, its lowest in more than 35 years. The equal-weight index gained 16.1% year to date, outpacing the traditional index’s 11.3%, excluding dividends.
1. Index performance diverges
In an analysis dated November 12, Europe Capital Partners said correlation between the S&P 500 and its equal-weight counterpart fell to 0.38, the lowest in more than 35 years. The equal-weight index gained 16.1% year to date, 4.8 percentage points ahead of the traditional index, excluding dividends. The analysis said the divergence exceeded dot-com bubble levels, with broader market strength contrasting with years of mega-cap technology dominance, and said greater dispersion creates opportunities for active investors to focus on individual businesses, earnings power and valuations.
