Markets Are Decoupling Again, Based On Return Correlations

Diversification across asset classes remains a core risk-management tool, but its relative benefits wax and wane over time. Portfolio managers should regularly reassess asset-allocation value using multiple measures (e.g., risk-adjusted returns, correlations, drawdown mitigation) to ensure diversification delivers the intended risk and return outcomes.

Analysis

Diversification across asset classes remains a core risk-management tool, but its relative benefits wax and wane over time. Portfolio managers should regularly reassess asset-allocation value using multiple measures (e.g., risk-adjusted returns, correlations, drawdown mitigation) to ensure diversification delivers the intended risk and return outcomes.