Equity-dividend correlation set to increase
Implied dividends on the DJ Eurostoxx 50 index remain low even after equity markets rallied in March, with dividends continuing to trade on the underperformance of equities. But the correlation between implied dividends and equities is expected to rise, especially if stocks continue to recover. This will give structured products investors who are bullish about equities the opportunity to play total-return trades priced with historically low implied dividends.
Dealers have been pushing total
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