When it comes to combating financial markets that all seem to move in unison, the options are getting so limited that some are questioning whether stock picking is a dying art.
The market term is "correlation," and it's a dirty word for anyone looking to diversify their portfolios and get some protection to the wild, whipsaw days of the current market environment .
Only a few ideas are working, and even those options are offering limited benefits.
"Stock picking will always matter," strategists at Bespoke Investment Group said in a research note. "But in an environment of such uniform market returns, the ability to generate alpha has become increasingly difficult."
The quest for alpha — or beating index benchmarks — has been one of the great casualties of the correlated market, which is moving in unison at historic levels.
The 10 sectors on the Standard & Poor's 500 have been moving together up or down 95 percent of the time, according to ConvergEx. US stocks are tied to the euro's movement 81 percent of the time, while even the least correlated S&P sector — utilities — is still highly correlated.
Shelter from the storm has come from only a few asset classes, with gold and other metalsmost prominent among them.Page 1 of 4 | Next Page