Comments on: Weak Correlation: Another Reason to Have Global REIT http://www.thesunsfinancialdiary.com/investing/weak-correlation-another-reason-to-have-global-reit/ Fri, 03 Feb 2012 17:42:24 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Presh Talwalkarhttp://www.thesunsfinancialdiary.com/investing/weak-correlation-another-reason-to-have-global-reit/#comment-26699 Presh Talwalkar Fri, 26 Oct 2007 21:13:21 +0000 http://www.thesunsfinancialdiary.com/investing/etf/weak-correlation-another-reason-to-have-global-reit/#comment-26699 Sun: Thanks for the reply. I guess this is a point of theory since perfectly negatively correlated assets don't exist. Plus, they would not do much good since arbitrage would make a portfolio of them return the risk-free rate. So yes, I ultimately agree that high returning investments with as weak correlations are the way to do. Sun: Thanks for the reply. I guess this is a point of theory since perfectly negatively correlated assets don’t exist. Plus, they would not do much good since arbitrage would make a portfolio of them return the risk-free rate. So yes, I ultimately agree that high returning investments with as weak correlations are the way to do.

]]> By: Sunhttp://www.thesunsfinancialdiary.com/investing/weak-correlation-another-reason-to-have-global-reit/#comment-26697 Sun Fri, 26 Oct 2007 20:55:16 +0000 http://www.thesunsfinancialdiary.com/investing/etf/weak-correlation-another-reason-to-have-global-reit/#comment-26697 Presh: Yes, in theory a correlation of -1 would be perfect. It means the two will go the opposite directions every time by the same amount. But I think that may not be what we want when it comes investment. If that's the case, then at the end we will have no gain and no loss either. With the a correlation of 0, the two will go totally random. When one goes up, the other would go either up or down, but has nothing to do with the movement of the first one. I think this is what we want to have for our investments :) Presh: Yes, in theory a correlation of -1 would be perfect. It means the two will go the opposite directions every time by the same amount. But I think that may not be what we want when it comes investment. If that’s the case, then at the end we will have no gain and no loss either. With the a correlation of 0, the two will go totally random. When one goes up, the other would go either up or down, but has nothing to do with the movement of the first one. I think this is what we want to have for our investments :)

]]> By: Presh Talwalkarhttp://www.thesunsfinancialdiary.com/investing/weak-correlation-another-reason-to-have-global-reit/#comment-26544 Presh Talwalkar Wed, 24 Oct 2007 21:52:55 +0000 http://www.thesunsfinancialdiary.com/investing/etf/weak-correlation-another-reason-to-have-global-reit/#comment-26544 Regarding, "To minimize the risk, we want asset classes in a portfolio to have weak correlations (it would be perfect if two asset classes have 0 correction, but that’s unlikely in real life)."I really enjoy the technical analysis on this blog, but just to be nit-picky, isn't a perfectly negative correlation of -1 the best in theory?http://www.icmarc.org/xp/rc/marketview/chart/1999/19990813imperfectcorrelation.html Regarding, “To minimize the risk, we want asset classes in a portfolio to have weak correlations (it would be perfect if two asset classes have 0 correction, but that’s unlikely in real life).”

I really enjoy the technical analysis on this blog, but just to be nit-picky, isn’t a perfectly negative correlation of -1 the best in theory?

http://www.icmarc.org/xp/rc/marketview/chart/1999/19990813imperfectcorrelation.html

]]> By: shadoxhttp://www.thesunsfinancialdiary.com/investing/weak-correlation-another-reason-to-have-global-reit/#comment-26486 shadox Wed, 24 Oct 2007 03:34:12 +0000 http://www.thesunsfinancialdiary.com/investing/etf/weak-correlation-another-reason-to-have-global-reit/#comment-26486 I looked at some of these a while back. DRW and RWX both have a fairly limited history, which bothered me a bit. You are absolultely right about the low correlation. I recently had a post on the subject of low correlation asset classes. Turns out that global bonds and commodities are two other asset classes which consistently exhibit low correlations vs. the S&P. I looked at some of these a while back. DRW and RWX both have a fairly limited history, which bothered me a bit. You are absolultely right about the low correlation. I recently had a post on the subject of low correlation asset classes. Turns out that global bonds and commodities are two other asset classes which consistently exhibit low correlations vs. the S&P.

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