Welcome to Finance and Fury’s ‘Say What Wednesday’. Today’s question is from John.
John asks, “What is the relationship (if any) between shares and property in Australia? Should we expect the broader share market to react to falling property prices?”
Correlation - a mutual relationship or connection between two or more things
Just because things are related it doesn’t mean that they are caused by one another, for example Lisa Simpson’s rock that repels tigers.
Correlation between asset classes
The correlation between the asset classes and that factors that play into this.
Study showed that shifts in stock and property markets can lead to the emergence of an unstable linear relationship between these markets.