Sector Correlation Heatmap
Visualise how market sectors move in relation to one another. Identify concentration risks, diversification opportunities, and natural hedging pairs using Pearson correlation coefficients (ρ).
Technology & Consumer show ρ = 0.71. Overexposure to both sectors amplifies drawdowns in risk-off environments.
Energy & Healthcare show near-zero correlation. Pairing these sectors provides robust diversification across economic cycles.
Commodities & Real Estate (ρ = 0.17) offer the best diversification within the heatmap — ideal for multi-asset strategies.
Sectors move strongly together. Adding both increases concentration risk. Consider reducing exposure to one.
Ideal diversifiers. These sectors respond to different economic forces, smoothing overall portfolio volatility.
Natural hedges. When one sector falls, the other tends to rise — reducing portfolio drawdown significantly.
