An inverse correlation is defined as: "A contrary relationship between two variables such that they move in opposite directions." Meaning, if items A and B are inversely correlated, when A moves up, B moves down by roughly the same percentage. And vice versa.
Below is a chart of the U.S. dollar over the past five years, as tracked by the PowerShares DB U.S. Dollar Index Bullish (UUP):
What's inverse correlation got to do with me?
Below is a chart reflecting the dollar (UUP) versus the commodity index (DBC) over the past five years. UUP data by YCharts As I mentioned here a few weeks ago, fears about slowing global growth may well be overstated. From the supply/demand side of the argument, this fear is a big part of the reason DBC is inexpensive right now. Take advantage of this and get a favorable entry point to an asset class that belongs in your portfolio anyway. At the time of publication, the author was long DBC. Follow @ArgyleCapital This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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