Correlation runs from +1 to −1. At +1, two things rise and fall together. At 0, they ignore each other. At −1, one zigs when the other zags.
The key insight of modern portfolio theory is that a portfolio’s risk depends not just on each holding’s swings, but on how those swings line up with each other.[1]
An umbrella seller and an ice-cream seller. Rain helps one and hurts the other. Own both and your income is steadier than betting on the weather.
This is why spreading across things that behave differently smooths the ride — and why owning ten very similar stocks is barely diversified at all.
Where these numbers come from
Finisdom’s Correlations page builds this grid from real price history, so you can see which holdings truly balance each other.
Open the Correlations gridPart of the Finisdom app — sign in to open it.