Understanding Asset Correlation for Effective Portfolios

13min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

This chapter discusses the complexities of asset correlation and its critical role in portfolio construction, emphasizing the importance of low correlation among asset classes for effective diversification. It introduces key concepts such as the 'Holy Grail principle' and a four-quadrant model to guide optimal asset allocation in varying economic conditions.

In this episode we answer questions from Nonamed, Ronald, and Jose. We discuss how sensational financial media works and why you should ignore it, being thankful for our listeners and how correlations work and relate to macro-economic environments in the context of the Holy Grail principle. And we discuss our charitable match outreach for the Father McKenna Center.

And then we go through our weekly portfolio reviews of all eight of the sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional links:

Father McKenna Center Donation Page -- Remember to mention "The Financial Quarterback match" in new donations: Donate - Father McKenna Center

Risk Parity Radio RSS Feed Page For Word Searching The Podcast: Risk Parity Radio RSS Feed (buzzsprout.com)

UNC Paper (not Duke!) Re Treasury Bond Correlations In Recessions (see Page 53 for Chart): ssrn_id4768684_code533828.pdf (elsevier-ssrn-document-store-prod.s3.amazonaws.com)

Ray Dalio Explains The Holy Grail Principle: Ray Dalio breaks down his "Holy Grail" (youtube.com)

Bridgewater Paper With Basic Quadrant Model Example (see Page 8): Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)