In today’s globalized market infrastructure, interdependent asset classes exhibit both positive and negative correlations. Harnessing said correlated market moves can be a calculated approach to mitigating risk while maintaining modest yet consistent gains.
According to Joe Rios, 28 year trading vet, NinjaTrader Ecosystem Partner and Founder of RiosQuant, the demonstrated mass movements of large institutions taking directional positions in the same asset class leads to greater potential of volatility and greater asset correlations. While some traders balk at the presence of the Institutions, Rios embraces these Institutional moves and welcomes their market participation as he trades with the Institutions, not against them.
Below are 4 prime examples of both positive and negative correlated markets and a great video explaining them:
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