Correlation Matrix
The correlation matrix charts the correlation of a set of funds, based on their performance over trailing 3, 5 or 10 year periods.
The matrix is based on the correlation coefficient, which will be a number between 1 and -1. If there is a perfect positive relationship between the two holdings, the correlation will be 1. A perfectly negative relationship will produce a correlation of -1.
The correlation matrix can help identify where further diversity is needed, by highlighting similar holdings.
Click here for an example of a correlation matrix
Click here to see how to generate a correlation matrix