Diversification is often misunderstood. It’s not just about holding a large number of positions, it’s about holding assets that behave differently when it matters most. In today’s interconnected markets, simply increasing the number of holdings doesn’t guarantee risk reduction. What truly matters is how many independent sources of risk the portfolio actually holds.
This application is designed to cut through the illusion of diversification. By analyzing the pairwise correlations across specific assets, we expose how much independent risk you’re actually taking.
This analysis examines the interrelationships between the 12 primary U.S. Sector SPDR ETFs, which collectively represent the major segments of the U.S. equity market. The full list of assets under review is as follows:
The underlying price data is sourced from Yahoo Finance and reflects total return, accounting for both capital appreciation and dividend distributions to provide a comprehensive measure of performance.