US Edition3 assets that may not diversify as well as you think
- Diversification is important in investing, allowing for better risk-adjusted returns by including assets with different performance characteristics.
- Real estate has historically been less correlated with the stock market, with a correlation as low as 0.10 during the early 2000s, but recently it has moved more in line with stocks, offering less protection during market declines.
- High-Yield bonds generally trade more with credit markets and may not provide the expected diversification, especially during weak economic growth, as they are correlated with stocks.
- Cryptocurrency has attracted interest from investors; however, it is characterized by extreme volatility and has shown increasing correlation with other asset classes, making it less effective as a diversifier.
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3 assets that may not diversify as well as you think - The Morning Sun
Diversification is a core principle of sound investing: A portfolio that includes assets with different performance characteristics often leads to better risk-adjusted returns than one that relies on a single asset class. But building a diversified portfolio can be easier in theory than practice, as many asset classes often touted as good portfolio diversifiers may not live up to their reputation. Real estate In some past periods, real estate in…
·Pittsburg, United States
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