DEFINITION of 'Recoupling'
When returns on asset classes revert back to their historical or traditional patterns of correlation. This is in contrast to decoupling, which occurs when asset classes break away from their traditional correlations. Recoupling occurs after a period in which the asset classes have been generating a return that shows little correlation.
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BREAKING DOWN 'Recoupling'
Recoupling and decoupling revolve around the idea that there is a correlation between asset classes based on fundamental factors, like trade relationships when referring to economies. For a true decoupling to occur, there needs to be the removal or weakening of the fundamentals behind the relationship.
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