Stocks and Bonds are not correlated. They are not negatively correlated. And neither are they positively correlated. One doesn’t “zig” when the other “zags.” This is exactly why portfolio allocations start with stocks and bonds – the diversification math works on uncorrelated asset classes. When you combine the two assets together you get lower portfolio volatility.
Here are some charts that show how the two asset classes differ:
S&P 500 and 3-month t-bills
Nifty 50 and 0-5 year TRI
Comments are closed, but trackbacks and pingbacks are open.