Goldman Sachs believes market conditions in 2026 could become more supportive for stock pickers and active portfolio strategies, according to insights from the bank’s equity flow specialists.
Analysis from the firm indicates that one-year at-the-money forward implied correlation levels are pointing to a market where individual stocks are likely to move more independently from one another in the year ahead. Such an environment tends to benefit investors who focus on security selection rather than broad index exposure.
Goldman Sachs strategists Gail Hafif, Lee Coppersmith and Brian Garrett said the data “tells us that 2026 is set to be one of the lowest correlation years for SPX in our dataset,” adding that this outlook could give stock pickers reason to “rejoice.”
The potential shift comes after a prolonged period in which alpha generation through stock selection has been difficult, largely due to the heavy concentration of a small number of large-cap stocks dominating major equity benchmarks.
Historically, lower correlation across stocks has created more fertile ground for active managers, as greater dispersion in performance can help identify both winners and laggards, allowing for more differentiated and potentially higher-performing portfolios.