What this chart is showing is that the stocks in the S&P 500 aren’t...
EndGame Macro@onechancefreedm
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Jul 24, 2025
~1 min read
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What this chart is showing is that the stocks in the S&P 500 aren’t really moving together right now, they’re all kind of doing their own thing. That’s what a low 1 month correlation means. And when correlations drop this low, it’s usually not a sign of a strong, healthy market. It’s often a sign that there’s confusion under the surface. A few big names might be carrying the index higher, while a lot of other stocks are either flat or down.
We’ve seen this before, like in late 2021 right before the market turned. Back then, correlations broke down the same way, and it was a signal that the market’s leadership was thinning out. And when those few leaders finally cracked, the whole index came down fast.
Low correlation also makes it harder to hedge risk. If stocks aren’t moving together, the usual playbook for managing portfolios doesn’t work as well. It also suggests that traders are reacting to very specific stories, like earnings, AI, or politics rather than broader trends.
So while the overall index might still look okay, this breakdown in correlation is a sign that the market is fragile underneath. It’s not necessarily a crash now signal, but it does mean the structure of this market is unstable and that could lead to a sharp snapback if anything goes wrong.
We’ve seen this before, like in late 2021 right before the market turned. Back then, correlations broke down the same way, and it was a signal that the market’s leadership was thinning out. And when those few leaders finally cracked, the whole index came down fast.
Low correlation also makes it harder to hedge risk. If stocks aren’t moving together, the usual playbook for managing portfolios doesn’t work as well. It also suggests that traders are reacting to very specific stories, like earnings, AI, or politics rather than broader trends.
So while the overall index might still look okay, this breakdown in correlation is a sign that the market is fragile underneath. It’s not necessarily a crash now signal, but it does mean the structure of this market is unstable and that could lead to a sharp snapback if anything goes wrong.
Liz Ann Sonders@LizAnnSonders
Rolling 1m correlation for S&P 500 has come down sharply over past few months … now back near lows of this year