Stock Market Correlations and the Business Sentiments: Evidence from the US and Germany
Stock Market Correlations and the Business Sentiments: Evidence from the US and Germany

Summary/Abstract: We analyse the correlations between the US and German stock markets and study the influences of the US and German business sentiments on the correlations. On the whole, high US business sentiment increases the correlations, while low US business sentiment decreases the correlations. However, the German business sentiment has virtually no influence on the correlations. The correlations are joint positive-type asymmetric, although the asymmetry is not statistically significant. Both the asymmetry in the correlations and the influences of the business sentiments on the correlations had structural breaks caused by the advent of the Euro and the recent financial crisis.

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