Sector dispersion of stock market indices and overall rise in share prices

When share prices rise, it is normally because: The macroeconomic (growth) situation is favourable; Monetary policy (interest rates, liquidity) is favourable; Risk aversion is low. This environment should also benefit struggling economic sectors, thanks to higher growth, less uncertainty and therefore less reluctance to invest in these sectors, as well as the abundant liquidity to invest. So o ne might think that an increase in the overall stock market index is associated with a reduction in dispersion between sector indices. An observation of the facts shows that the complete opposite is the case: there is a strong positive correlation between the level of share prices and the dispersion of sector indices. This tells us that after the COVID crisis, a sharp recovery in share prices will lead to an even stronger rise in the sector dispersion of indices.