Portfolio Implications of a Positive Stock-Bond Correlation World

16 Pages Posted: 9 Dec 2022

Date Written: November 2022

Abstract

Understand the potential implications for portfolio performance and construction if fiscal and monetary policies produce a sustained period of positive stock-bond correlation. In a world of positive stock-bond correlation, the performance of a balanced portfolio will suffer, but the benefits of portfolio diversification remain intact.

Keywords: PGIM IAS, stock-bond correlation, portfolio risk, asset allocation, portfolio construction, developed markets, CIOs, macroeconomic, stock, bond, hedge, global perspective, fiscal policy, monetary policy, diversification, portfolio implications

Suggested Citation

Weisberger, Noah and Xu, Xiang, Portfolio Implications of a Positive Stock-Bond Correlation World (November 2022). PGIM IAS - November 2022, Available at SSRN: https://ssrn.com/abstract=4298416 or http://dx.doi.org/10.2139/ssrn.4298416

Noah Weisberger (Contact Author)

PGIM-IAS ( email )

Prudential Tower
655 Broad Street, 19th Floor
Newark, NJ 07102
United States
201-207-6879 (Phone)

Xiang Xu

PGIM-IAS ( email )

Prudential Tower
655 Broad Street, 19th Floor
Newark, NJ 07102
United States

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