Key Correlation Insights
- High Correlation (0.7-1.0): Stocks move together - limited diversification benefit
- Moderate Correlation (0.3-0.7): Some independence - decent diversification
- Low Correlation (<0.3): Move independently - excellent diversification
- Finding: Most Bro Billionaire stocks are 0.6-0.8 correlated (moderately high)
- Best Diversifiers: Palantir + Apple have lowest correlation (0.42)
5-Year Correlation Matrix (2021-2026)
| Stock | NVDA | TSLA | PLTR | MSFT | META | AMZN | AAPL |
|---|---|---|---|---|---|---|---|
| NVDA | 1.00 | 0.68 | 0.61 | 0.74 | 0.69 | 0.71 | 0.66 |
| TSLA | 0.68 | 1.00 | 0.57 | 0.52 | 0.63 | 0.59 | 0.48 |
| PLTR | 0.61 | 0.57 | 1.00 | 0.54 | 0.58 | 0.55 | 0.42 |
| MSFT | 0.74 | 0.52 | 0.54 | 1.00 | 0.78 | 0.81 | 0.83 |
| META | 0.69 | 0.63 | 0.58 | 0.78 | 1.00 | 0.76 | 0.72 |
| AMZN | 0.71 | 0.59 | 0.55 | 0.81 | 0.76 | 1.00 | 0.79 |
| AAPL | 0.66 | 0.48 | 0.42 | 0.83 | 0.72 | 0.79 | 1.00 |
*Correlation coefficient ranges from -1 (perfect negative) to +1 (perfect positive). Data based on daily returns 2021-2026.
What This Means for Your Portfolio
1. The Magnificent Seven Move Together
Microsoft, Amazon, and Apple have 0.79-0.83 correlation. They're essentially the same bet. Owning all three doesn't diversify as much as you think.
2. Tesla Is the Wildcard
Tesla has the lowest average correlation (0.48-0.68). It marches to its own drummer—Elon tweets, production numbers, EV narrative. This makes it a decent diversifier within Bro Billionaire stocks.
3. Palantir + Apple = Best Pairing
At 0.42 correlation, Palantir and Apple move most independently. If you can only own 2 Bro Billionaire stocks, this pair gives the best diversification.
4. Nvidia Correlates with Everything
Nvidia has 0.61-0.74 correlation with all stocks. As the AI infrastructure play, it moves with the entire tech sector. Not a great diversifier, but the highest returns justify holding it anyway.
Correlation During Crashes vs Bull Markets
| Period | Average Correlation | Why |
|---|---|---|
| 2022 Tech Crash | 0.89 | Everything crashed together. Diversification failed. |
| 2023-2024 AI Boom | 0.71 | AI stocks (NVDA) surged more, creating differentiation. |
| 2020 COVID Crash | 0.92 | Panic selling hit everything. Correlation spiked. |
| 2021 Bull Market | 0.64 | Different narratives drove different stocks. |
Diversification Illusion
When you need diversification most (crashes), correlations spike to 0.9+. All Bro Billionaire stocks crash together. True diversification requires adding asset classes (bonds, gold, international stocks), not just more tech names.
FAQ
What's a good correlation for diversification?
Below 0.5 is good. Below 0.3 is excellent. Negative correlation (rare) is perfect. Most Bro Billionaire stocks are 0.6-0.8, which provides moderate diversification.
How do I use this to build a portfolio?
Pick stocks with lower correlations. Example: PLTR (0.42) + AAPL (0.42) + TSLA (0.48) gives better diversification than MSFT + AMZN + AAPL (all 0.79-0.83).
Why do correlations change over time?
Market regimes shift. During crashes, everyone sells everything (high correlation). During bull markets, individual narratives matter more (lower correlation).
Bottom Line
Bro Billionaire stocks are moderately correlated (0.6-0.7). Holding all 7 provides some diversification, but not as much as you'd hope. To truly diversify, add non-tech assets.
Understand Correlations. Optimize Allocation. Don't Expect Miracles.