{"id":2098583,"date":"2019-01-29T11:23:55","date_gmt":"2019-01-29T05:53:55","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2098583"},"modified":"2019-01-29T11:23:55","modified_gmt":"2019-01-29T05:53:55","slug":"stock-and-bond-correlations-and-volatility","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2019\/01\/29\/stock-and-bond-correlations-and-volatility\/","title":{"rendered":"Stock and Bond Correlations and Volatility"},"content":{"rendered":"<p>Stocks and Bonds are <em>not<\/em> correlated. They are not <em>negatively<\/em> correlated. And neither are they <em>positively<\/em> correlated. One doesn&#8217;t &#8220;zig&#8221; when the other &#8220;zags.&#8221; This is exactly why portfolio allocations start with stocks and bonds &#8211; the diversification math works on uncorrelated asset classes. When you combine the two assets together you get lower portfolio volatility.<\/p>\n<p>Here are some charts that show how the two asset classes differ:<\/p>\n<h3>S&amp;P 500 and 3-month t-bills<\/h3>\n<p><a href=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/correlations\/sp500.tbill.correlation.1mo.1990-12-20.2018-12-20.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/correlations\/sp500.tbill.correlation.1mo.1990-12-20.2018-12-20.png\" width=\"6000\" height=\"2400\" alt=\"sp500.tbill.correlation.1mo\" class=\"alignnone size-full\" \/><\/a><\/p>\n<p><a href=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/volatility\/sp500.tbill.volatility.1mo.1991-10-20.2018-12-20.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/volatility\/sp500.tbill.volatility.1mo.1991-10-20.2018-12-20.png\" width=\"6000\" height=\"2400\" alt=\"sp500.tbill.volatility.1mo\" class=\"alignnone size-full\" \/><\/a><\/p>\n<h3>Nifty 50 and 0-5 year TRI<\/h3>\n<p><a href=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/correlations\/nifty50.z5.correlation.1mo.2003-12-20.2018-12-20.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/correlations\/nifty50.z5.correlation.1mo.2003-12-20.2018-12-20.png\" width=\"6000\" height=\"2400\" alt=\"nifty50.z5.correlation.1mo\" class=\"alignnone size-full\" \/><\/a><\/p>\n<p><a href=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/volatility\/nifty50.z5.volatility.1mo.2004-10-20.2018-12-20.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/allocation\/volatility\/nifty50.z5.volatility.1mo.2004-10-20.2018-12-20.png\" width=\"6000\" height=\"2400\" alt=\"nifty50.z5.volatility.1mo\" class=\"alignnone size-full\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stocks and Bonds are not correlated. They are not negatively correlated. And neither are they positively correlated. One doesn&#8217;t &#8220;zig&#8221; when the other &#8220;zags.&#8221; This is exactly why portfolio allocations start with stocks and bonds &#8211; the diversification math works on uncorrelated asset classes. When you combine the two assets together you get lower portfolio &hellip; <\/p>\n","protected":false},"author":2,"featured_media":2093053,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471],"tags":[954,1150],"class_list":["post-2098583","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-insight","tag-correlation","tag-volatility","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2098583","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=2098583"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2098583\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/2093053"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2098583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2098583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2098583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}