The Importance of Diversification in Fixed Income

The theoretical improvement in correlation terms, from, say, a 50 to a hundred is nothing. But if you look at the actual improvement, you see it's much bigger than that. Whenou have 50 hundred on the 50 markets, you're twice as likely pick up these tale events than you were with 50 markets. The current crisis period is very unusual in the sense that, a generally speaking, we are short bonds intreas trend followers. We've had a fairly steady downward trending in bomb prices,. which has more than offset the positive carry effects thi's been great for for bonds. And shorting bonds, as you say, has been one of the trades that's kind of

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