Stats Volatility and VIX Correlation in crashes

Correlation rises in bear markets, not in volatile ones

7 Jun 2010: 75.0875.087 Jun 20109 Jun 2026: 11.6211.629 Jun 2026

June 2010 was the European sovereign debt crisis, weeks after the flash crash. June 2026 was a calm market near highs. Source: Cboe COR3M history and quote data.

Stocks in one equity market move together more when the market falls than when it rises. US correlations on downside moves run 11.6% above what a normal distribution implies. The trigger is the market trend, not volatility, and diversification degrades rather than fails.

11.6%Downside deviation
75.08Implied correlation 2010
11.62Implied correlation 2026
0.95Hedging gap, Apr 2025

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