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Have Correlations Made Your Holdings One Color?

Higher correlations paradoxically have caused diversification--and investors' tools to attain it--to be even more important than they were before.

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Christine Benz: Hi, I'm Christine Benz for Morningstar.

Whether the proliferation of index funds and exchange-traded funds has helped drive increasing correlations and volatility in the market, has been the subject of some debate in the investment community during the past several years.

Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.