Asset Correlation

Dan Haugh has written an interesting article in the CBOE’s “What’s On Our Minds” blog on asset correlation.   I think the traditional allocation strategies that attempt to lower volatility in a portfolio and reduce risk are showing serious signs of old age.  Technology trends (specifically ETFs / ETNs) are changing the way investors can invest, and traditional difficulties ( like the ability to directly invest in commodities ) have been breached.  You no longer have to buy Krugerrands to go long on gold.

This week for example, gold, treasuries, and the S&P have all been up.   This doesn’t prove anything—except that there are no fixed rules, but I predict there will be more lock step behaviors.


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