Caixin
Sep 26, 2023 07:37 PM
OPINION

Fisher: How You Can Bust Market Myths — and Profit

Correlations measure the strength of the relationship between two variables’ movements. When one zigs, does the other reliably zag? Or does it zig in parallel? Or flip-flop unpredictably? Photo: VCG
Correlations measure the strength of the relationship between two variables’ movements. When one zigs, does the other reliably zag? Or does it zig in parallel? Or flip-flop unpredictably? Photo: VCG

Stocks move opposite to bonds! Rising oil is bearish! Climbing interest rates threaten tech! What do all these widely accepted investing axioms have in common? Every one of them is false. Plenty of other conventional “wisdom” pundits peddle is actually wrong, wrong, wrong, too — and identifying which bits are bogus can give you an edge. But how can you tell the maxims with merit from the phony fables? One crucial tool to help: correlations. These simple but mighty mathematical measures are market myth-busters. Here is why they are so effective — and how you can use them to get a leg up.

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