Why Venture Capital Returns Are Going Up - Venture Capital Dispatch. Profit From Asset Correlations. Wikinvest - Investing Simplified. Inherently Unstable « Systematic Relative Strength. No, this is not a post on personality disorders. Rather, it is a post on the inherently unstable nature of correlations between securities and between asset classes. This is important because the success of many of the approaches to portfolio management make the erroneous assumption that correlations are fairly stable over time.
I was reminded just how false this belief is while reading The Leuthold Group ‘s April Green Book in which they highlighted the rolling 10-year correlations in monthly percentage changes between the S&P 500 and the 10-year bond yield. Does this look stable to you? Chart is shown by permission from The Leuthold Group . (Click to Enlarge) If you are trying to use this data, would you conclude that higher bond yields are good for the stock market or bad? This becomes a big problem for strategic asset allocation models that use historical data to calculate an average correlation between securities or asset classes over time.
Asset Correlations. Zero hedge | on a long enough timeline, the survival rate for everyone drops to zero.