Correlation amongst asset classes Part 1

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What is a correlation?

Inter market analysis is a method of analyzing markets by examining the correlations between different asset classes.

How may types of Correlation?

There are two types of Correlation, Positive and Negative.

Which is the Best Correlation?

Negative Correlation.

Why Negative Correlation is the best?

It can help to minimize loss. For eg. There is a negative correlation in Gold and Equities, so one can invest in both the asset class to diversify the portfolio, so when there is a unprecedented event like war or Covid-19 Gold will act as a safe haven and equities can become volatile. 

How to check the Correlation?

The best way to understand the Correlation is to see on the charts and figure it out. 

What is a Positive Correlation?

A Positive Correlation is when both the asset class moves in sync with each other or can even be in tandem.

What is a Negative Correlation?

A Negative correlation is when two asset class show divergence or move away from each other.




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