Now consider the correlation matrix below. In a world where correlations greater than 0.80 are the norm for stocks and commodities, the highest correlation between growth-oriented ETFs in this portfolio is less than 0.60.
I am not suggesting that you jettison your holdings. For one thing, keeping up with correlations can be more difficult than keeping up with the Kardashians. Secondly, beating the market with seven ETFs is a foolhardy financial pursuit, even when your foresight has a history of succeeding. (Review my November 2010 article: "How My 7 ETFs Trounced The S&P 500." That said, I encourage investors to check correlation coefficients. Make sure high-positive or high-negative correlations are in check, either by committing to stop-loss limit orders on each investment or by making a few adjustments to some of the positions in your account(s). You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can review more ETF Expert features here.