The Truth Behind the S&P 500: A 0.13 Correlation Reveals Extreme Divergence in the US Stock Market

[Coin World] An interesting phenomenon has recently emerged in the U.S. stock market - on the surface, the index is rising, but in reality, most stocks have not kept up with the pace.

The data clearly shows: the 3-month average stock correlation of the S&P 500 has dropped to 0.13, which is a low range since 2018. This indicator essentially measures how synchronized individual stocks are with the overall market index. What does 0.13 mean? It means that the vast majority of stocks are behaving independently and not following the direction of the index at all.

Looking back at the sharp market drop in April, the correlation value was around 0.50 at that time – it was truly a “rise together, fall together” situation.

The current situation can be summed up as follows: a few tech giants with sky-high market caps are holding up the scene, they are rising happily and pulling the index up; as for the other hundreds of stocks? They continue to fall as they are, completely in the awkward position of “the index rises and I don’t rise, the index falls and I fall with it.”

This extreme polarized market is not good news for ordinary investors.