Correlations in finance tend to be unstable. Take two equity stocks in the same sector and one year the correlation could be 0.8 and another year it could be 0.

Correlations in finance tend to be unstable. Take two equity stocks in the same sector and one year the correlation could be 0.8 and another year it could be 0.3. Obviously, there are relationships between rates, cost of equity, debt, etc. As Howard Marks says, “the seven worst words in investing are ‘too much money chasing too few deals’” So I think a better question to ask then what are the correlations between these assets is to ask “what’s driving CLO issuance, and is that sustainable?”