Ideas Post

Asset Classes/Strategies With No Or Negative Correlations to Equities

A small project I am working on. There is a difference between no correlation and negative correlation. Nothing in this context is infallible, but quite a few are pretty reliable.

    1. Long volatility

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    A reliable one for negative correlation but this exposure can do down in value dramatically when stocks go up.

    2. Managed futures

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    Pretty reliably negative.

    3. Bitcoin

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    No reliable relationship either way. Sometimes positively correlated to stocks, sometimes no correlation and at times it has been negatively correlated.

    4. Electricity futures

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    This is a new one to me. A new fund just started trading under symbol AMPD. The fund manager was on Bloomberg TV, he said electricity futures have no correlation. I have no idea, we'll see.

    5. Long low beta/short high beta

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    This pertains to just one fund that I know of that is pretty reliably negative.

    6. Convertible arbitrage

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    Looks like low correlation because of very low volatility.

    7. Merger arbitrage

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    Also looks like low correlation because of very low volatility.

    8. Gold

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    Often negative but not always.

    9. Other commodities

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    Similar story as with gold but broad commodities often trades differently than gold.

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