From Article:
"I’m writing this article for those buy and hold investors who would much rather sit out these down days or weeks and to give an idea of how to construct a portfolio that will take minimum damage while this ugly unwinding unfolds.?"
And,
"If we can combine assets whose returns have low correlation with each other, we can reduce the overall dispersion of returns, the “volatility” of our portfolio."
Finally,
"The optimal would be an asset whose trend is positively correlated with S&P 500 index but whose returns are negatively correlated with S&P 500 returns. With such an asset we would ensure not to miss out on a stock market rally while minimizing our losses on down days, perhaps weeks or years."
Owning assets in my over all portfolio that are uncorrelated to each other provides a very important dividend for me...it's called sleep.
Link to Article:
In-search-of-low-or-negative-correlation-between-asset-returns
