{"id":1999781,"date":"2014-08-08T20:29:38","date_gmt":"2014-08-08T14:59:38","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=1999781"},"modified":"2014-09-09T11:55:10","modified_gmt":"2014-09-09T06:25:10","slug":"diversify","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2014\/08\/08\/diversify\/","title":{"rendered":"Why Diversify?"},"content":{"rendered":"

One of the main benefits of diversification is that if you invest in a group of assets with low correlations to one another, then you are likely to get the highest return for a given level of risk. But has it really worked that way for Indian investors? Here’s what we found while we crunched some numbers using CNX 100 and GSec 8+ year total return index since 2003.<\/p>\n

Correlation<\/h3>\n

Yes, correlations are low: 0.0624. And we have a scatter-plot to prove it:<\/p>\n

\"CNX<\/a><\/p>\n

Returns<\/h3>\n

Here’s how the yearly returns look like (%):<\/p>\n

\"stocks.vs.bond.returns\"<\/a><\/p>\n

An 80:20 stocks:bonds portfolio would have had an average return of 21.43% vs 25.81% of a stock-only portfolio – a give up of 4.38% in returns – with lower volatility.<\/p>\n

The question is, is it worth the trade off if you can stomach the volatility?<\/p>\n

Related: BOND \u2260 BORING<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

One of the main benefits of diversification is that if you invest in a group of assets with low correlations to one another, then you are likely to get the highest return for a given level of risk. But has it really worked that way for Indian investors? Here’s what we found while we crunched … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[2821,960],"class_list":["post-1999781","post","type-post","status-publish","format-standard","hentry","category-investing-insight","category-your-money","tag-bonds","tag-returns","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1999781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=1999781"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1999781\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=1999781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=1999781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=1999781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}