Negative Correlation Is Dead! Long Live The 60/40 Portfolio!
Even in a positive stock-bond correlation world, diversified portfolios still have a critical role to play.
With both stocks and bonds recording losses in 2022, the 60-40 portfolio delivered its worst annual performance since the global financial crisis. What does a positive correlation between stocks and bonds mean for the future of portfolio construction? In this webinar, Noah Weisberger, Managing Director in PGIM’s Institutional Advisory & Solutions group, provides a comprehensive look at the historical drivers of stock-bond correlation and implications for CIOs to consider. Watch the replay for a discussion about allocation strategies in a positive stock-bond correlation world, the impact of positive correlation on long-term performance, and why the 60-40 portfolio remains relevant today.
The IAS team conducts bespoke, quantitative client research that focuses on asset allocation and portfolio analysis.
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Even in a positive stock-bond correlation world, diversified portfolios still have a critical role to play.
While simultaneous large declines in stock and bond prices are likely temporary, a positive stock-bond correlation regime may persist.
DM local stock-bond correlations are determined by both local macroeconomic factors and common global macroeconomic factors.