What does this mean? That your stocks stay at a constant value or that they go down when markets go up or what!?Is it possible to build a stock portfolio nowadays with zero or negative correlation?
What does this mean? That your stocks stay at a constant value or that they go down when markets go up or what!?
Really? It does to me.Trying to avoid volatility doesn't make much sense to me.
Perfect negative correlation between two assets means that your money stands still. Riding out volatility in selected markets/assets etc. will usually result in your money growing over the long term.Really? It does to me.
If you were nearing the time at which you were going to draw down pension benefits then you should have already done an advance preparatory shift into something like cash or bonds to avoid volatility. That's what most PRSA (and other?) pension default investment strategies aim to do for example.If you reach retirement age and the one market you had invested in was in the middle of a major downturn, would it not have made sense to have invested also in a second market with zero/negative correlation?
Really? It does to me.
If you reach retirement age and the one market you had invested in was in the middle of a major downturn, would it not have made sense to have invested also in a second market with zero/negative correlation?
I have been gradually getting into investing over the past year, investing a substantial sum of money in a fairly diversified basket of 6 ETF. (the usual suspects, EU, US, Emerging, Japan, small stocks) However what I've been somewhat surprised at has been the correlation of all the markets (both on their way up and down)
Is it possible to build a stock portfolio nowadays with zero or negative correlation?
What should I be looking at to add some market diversification to my portfolio , property funds, commodities or gold (shudder)?
Any comments would be welcome
Not necessarily; the expected return and volatility are different aspects of the behaviour of asset prices. You're looking for two assets with negatively correlated volatility, not negatively correlated growth. Both assets can be volatile (with negative correlation) and growing. The trick, according to Modern Portfolio Theory is to pick a portfolio where the volatility of the assets cancels out as much as possible without affecting the overall growth of the portfolio. Google for "efficient frontier".Clubman said:Perfect negative correlation between two assets means that your money stands still. Riding out volatility in selected markets/assets etc. will usually result in your money growing over the long term.
True - I stand corrected.You're looking for two assets with negatively correlated volatility, not negatively correlated growth.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?