How the fear index's cousin can make or break a stock picker
http://finance.yahoo.com/news/how-t...n-make-or-break-a-stock-picker-174305378.html
"The VIX volatility index is widely known as the "fear index," or a gauge of what investors believe the volatility of the S&P 500 will be at a future date. It is calculated from option prices of the stocks that comprise the S&P 500. Volatility is highly correlated with market declines, so a rising VIX indicates investor sentiment is shifting negative, meaning a market decline is expected.
The VIX has a relatively unknown cousin called implied correlation, which may be considered the "herd index." It is also calculated from option prices of stocks in the S&P 500. In addition, it includes option prices on the S&P 500 index itself. A rising implied correlation means stocks are highly correlated and moving together, while a declining implied correlation indicates stocks are moving individually, or idiosyncratically."
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http://finance.yahoo.com/news/how-t...n-make-or-break-a-stock-picker-174305378.html
"The VIX volatility index is widely known as the "fear index," or a gauge of what investors believe the volatility of the S&P 500 will be at a future date. It is calculated from option prices of the stocks that comprise the S&P 500. Volatility is highly correlated with market declines, so a rising VIX indicates investor sentiment is shifting negative, meaning a market decline is expected.
The VIX has a relatively unknown cousin called implied correlation, which may be considered the "herd index." It is also calculated from option prices of stocks in the S&P 500. In addition, it includes option prices on the S&P 500 index itself. A rising implied correlation means stocks are highly correlated and moving together, while a declining implied correlation indicates stocks are moving individually, or idiosyncratically."
(More at above url)