People have been fretting about whether hedge funds in general are too closely correlated. Returns have correlated enough even before the current malaise started to spark concerns by the Federal Reserve Board [1] among others. The New York Times offers an interesting piece about the relatively closed universe of quant fund managers. They all seem to know one another. Many trained with each other. And there's a lot of cross pollination at the top firms. Does all this lead to funds that are anything but dissimilar? They all seem to be creaking in concert right now. Maybe the models really share the same sauce, if you know what I mean. The dirty little secret of the niche. We'll see how they perform going forward, but you would have to think that human override will have to kick in soon. It's gut check time. Hopefully, we'll see some signs of less correlation going forward.  

For more:
- here's the article [2] from The New York Times