The charts below high­light the rolling six month cor­re­la­tions for the S&P 500 rel­a­tive to oil, US Trea­suries, and gold.  There has been much dis­cus­sion recently regard­ing the extreme cor­re­la­tions within global finan­cial mar­kets, and it is illus­trated in the charts which show that all three asset classes have recently had cor­re­la­tions that were at or near multi-year pos­i­tive or neg­a­tive extremes.  In fact, the cor­re­la­tion between the S&P 500 and US Trea­suries was recently at a record inverse extreme.

In recent weeks, how­ever, the extreme cor­re­la­tions between the S&P 500 and all three asset classes has eased some­what, with the inverse cor­re­la­tion between the S&P 500 and gold mod­er­at­ing sub­stan­tially.  While many investors are surely hop­ing that the finan­cial mar­kets can indeed return to some sort of nor­malcy where not every asset is joined at the hip, in an envi­ron­ment flooded with liq­uid­ity, any change to the cur­rent is likely to be only temporary.

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