Stock pickers, as a group, may or may not outperform the broad market going forward. But it looks to be getting a bit easier for them to do so.
After Donald Trump's presidential win, the correlations among S&P 500 stocks have fallen markedly, to nearly the lowest level in two years, Chris Verrone of Strategas Research Partners found.
As stock performance becomes increasingly disparate, the theoretical manager who is skilled at determining which stocks will outperform and which will underperform should generate a greater degree of outperformance.
What makes the drop in correlations especially notable is that it was caused by a large, external event; these types of events frequently cause correlations to rise.