The Pack Mentality: A Behavioral Finance View of Stock Price Comovement

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Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.

By looking carefully at data on individual stock prices, it is easy to find many examples of “comovement” – groups of stocks whose prices tend to move together. For instance, prices of stocks in the same industry tend to move together, as do the prices of small-cap stocks, value stocks, and closed-end funds.

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