• Decoupling is when the performance of an asset class that has been correlated with other assets in the past no longer changes in line with expectations.

  • Decoupling can also refer to a discrepancy between the performance of a country’s investment market and the state of its core economy.
  • Investors may view the decoupling as an opportunity if they believe the old correlation pattern will return, but there is no guarantee that this will happen.
  • Many sustainable development economists also advocate decoupling economic growth from environmental pressures, that is, finding ways to achieve growth without exacerbating environmental impacts.
  • Relative decoupling refers to a decreasing correlation between two assets, while absolute decoupling means zero or negative correlation.