Studies of correlations among monthly equity price index returns have found:
A) Low correlations between various U.S. equity indexes
B) High correlations between various U.S. equity indexes
C) High correlations between U.S. and non-U.S. equity indexes
D) Negative correlations between various U.S. equity indexes
E) None of the above

Question

Quizplus · Accepted Answer

Studies have found high correlations among various U.S. equity indexes, indicating that they tend to move in the same direction. This is known as a "marketwide" effect, where movement in one stock index is mirrored in other stock indexes. However, correlations between U.S. and non-U.S. equity indexes can vary depending on market conditions and economic factors.

Studies of Correlations Among Monthly Equity Price Index Returns Have