12 ms·
A financial asset with barely positive returns but uncorrelated to other financial assets is actually an extremely valuable thing. Heck, if you can find a bask
by pembrook 2y ago
A financial asset with barely positive returns but uncorrelated to other financial assets is actually an extremely valuable thing.
Heck, if you can find a basket of 4-5 uncorrelated return streams that only deliver 1% per year after inflation, you could start a hedge fund. Non-correlation = reduced volatility = the ability to apply massive leverage to increase that 1% return.
- kgwgk 2y ago> Non-correlation = reduced volatility If the volatility of each uncorrelated thing is high you may need to put together many more than 4-5 to bring it down.
- jgalt212 2y agoonly if such assets have very low / no vol. With any level of leverage such a strategy brings along a significant risk of gambler's ruin.