Sector Correlations Are at Record Lows. Here's Why.

Rotation is the name of the game in this bull market, but it’s having some unexpected impacts. There was a new sector leading market gains nearly every month in the first half of 2026, keeping index volatility at bay while fueling record low correlations, Ned Davis Research shows. The energy sector exemplifies the phenomenon, with volatility driven by the evolution of the war in Iran.