According to John Melloy, Fast Money Executive Producer, CNBC.com on The Christian Science Monitor, the correlation of moves in individual stocks and the S&P 500 index is at a record, making the job of long-only mutual fund managers to differentiate
from the benchmark virtually impossible, according to a report from Goldman Sachs.
The correlation for the S&P 500 and its members is at 0.73, according to Goldman, meaning that the majority of stocks move in lockstep with the index on a daily basis. This is at least the highest in 20 years and therefore likely a record
“Record high S&P 500 and sector correlation poses a challenge for fundamental investors,” said David Kostin, chief U.S. investment strategist at Goldman Sachs, in the Friday note.