Many investors who thought they had avoided putting all of their eggs in one basket just got egg on their faces instead.
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In the past few years, more assets have been acting similarly, says Anthony Richards, managing principal at money manager Stairway Partners. He has found that corporate bonds and emerging-market stocks increasingly have been moving in step with U.S. stocks. Lately, this has been true even for commodities broadly.
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…with the flood of cash into financial markets in recent years making it harder to generate returns, the search for uncorrelated assets has become particularly keen.
But by deliberately investing in assets that have shown little correlation in the past, investors may be making those assets more correlated, says Craig Asche, executive director of the Chartered Alternative Investment Analyst Association.
…the riskiest financial assets are now showing the highest degree of correlations to one another, Mr. Richards says.
Lahart, Justin. “Ahead of the Tape.” The Wall Street Journal 1 March 2007: C1.
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