The “Magnificent 7” moniker has had a good run. But the basket is beginning to break at the same time more granular AI-related equity stories are gathering momentum.
The Mag 7's average pairwise correlation, on a six-month rolling basis, has collapsed to 25% this year—its lowest reading since at least 2019 and well below the 75% pairwise correlation reached in early 2023.
So if the Mag 7 has broken as a reliable mega-cap market barometer, what replaces it? Increasingly, investors should monitor thematic sectors and equity baskets to better assess what is driving markets.
While we believe the usefulness of the Mag 7 moniker has changed, our long-standing conviction on equities broadly has not.
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By Jeff Blazek
The “Magnificent 7” moniker has had a good run. But the basket is beginning to break at the same time more granular AI-related equity stories are gathering momentum.
