hey guys I had a quick question on fixed income and equities... generally speaking, is it better to have a Fixed Income portfolio that has a low correlation with equities? and why?
thanks
Trending Content - Asset Management Forum
| +38 | Strategy to asset allocation | 10 | 3w |
| +36 | Q&A | Research Associate, Long-Only | (0 years in DCM/IB/consulting) | 12 | 3d |
| +17 | Working for Endowment? | 8 | 2w |
| +14 | Early career insurance AM - should I just thug it out? | 3 | 1w |
| +8 | Bridgepoint Acq Kayne Anderson RE | 2 | 2w |
| +7 | CPP Early Investor Program (Summer 2027) Check | 5 | 6d |
| +6 | MBB to Banking Career | 1 | 2w |
| +6 | Goldman Sachs Operations? | 1 | 2w |
| 0 | BlackRock increasing SA comp? | 3 | 1w |
Career Resources
yes, helps diversify away unsystematic risk
No you want all your investments to be as correlated AS POSSIBLE. This helps you make tons of money if you're right! Common Sense!
Fixed Income and Equities have very low correlations to one another. Correlation simply measures the degree of linear relationship between two variables i.e. bond and stock returns. If bonds and stocks moved in tandem with each other you'd see high correlation close to 1.00. Stocks are inherently more risky and are more sensitive to economic change.
bonds and equities, on average, have a negative correlation. but I believe many people look at the two asset classes as separate so its often more interesting to look at correlations of different fixed income products within a portfolio.
Illum repellendus maiores vero excepturi ut est odit. Commodi accusamus nostrum itaque fugiat. Rerum excepturi vero voluptas rerum. Recusandae voluptate et harum alias est delectus assumenda. Nemo voluptates et voluptatem id quaerat. Illo facilis veniam est optio. Tempore ullam quis qui quia. Sunt molestiae cumque vero sapiente vel dicta nobis.
Perspiciatis quis consequuntur voluptate provident. Quidem rerum nihil architecto dignissimos officia est.
Et sapiente itaque ipsa soluta et. Similique culpa similique necessitatibus maxime numquam itaque est. Dolores expedita et est cumque et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...