A correlation of 1.0 means perfect positive correlation. It indicates that two assets move in the exact same direction, in perfect proportion. This is typically only seen when comparing an asset to itself, or to an ETF that strictly tracks it.
Negative correlation (values between 0 and -1) means that when one asset goes up, the other tends to go down. Holding negatively correlated assets can reduce overall portfolio volatility and mitigate losses during market downturns, a core principle of modern portfolio theory.
Correlation is not static; it changes continuously based on market conditions, economic cycles, and sector-specific news. During a severe market crash or panic, the correlation of almost all equities tends to converge toward 1.0 as assets are sold off simultaneously.
A correlation of 0 (or near zero) indicates that there is no linear relationship between the price movements of the two stocks. While their daily returns don't move together in a predictable pattern, they may still be exposed to different, non-linear macroeconomic risks.
The Pearson correlation coefficient is a statistical measure that calculates the linear relationship between two variables. In finance, it measures how closely the daily returns of two assets move together, mapped on a scale from -1.0 to 1.0.
This tool computes the Pearson correlation coefficient between the daily logarithmic returns of the specified assets over the past 252 trading days (approximately 1 year). Daily adjusted close prices are fetched directly via Yahoo Finance APIs.
The resulting matrix displays values ranging from -1.0 to 1.0. A value of 1.0 means perfect positive correlation (they move in lockstep), 0.0 means no linear correlation, and -1.0 means perfect negative correlation (they move in exactly opposite directions).
Westmount Fundamentals. "Stock Correlation Matrix." westmountfundamentals.com/stock-correlation-matrix, 2026.