Correction Definition
Learn the definition of correction and other ETF terminology from the etf.com glossary.
Learn more about Corrections
In ETFs, a correction denotes a substantial short-term decline in the market, typically exceeding 10% from its recent peak. Corrections are natural phases within market cycles, often triggered by various factors, including economic indicators or geopolitical events. ETFs tracking broad market indices experience value fluctuations during corrections as underlying securities adjust to shifting market sentiment. Investors recognize corrections as potential buying opportunities, leveraging the inherent diversification in ETFs to navigate market volatility. Understanding corrections is integral to devising a well-informed investment strategy and capitalizing on market conditions for long-term portfolio growth.
Related Terms
Diversification, Exchange-Traded Fund (ETF)
