FYI: Mark Twain’s criticism of the misuse of statistics was best expressed in one of his more famous quotes: “There are three kinds of lies: lies, damned lies and statistics."
In my practice, I have seen some very sophisticated, professional investors confuse statistics with reality, and lie to themselves as they built their own portfolios using asset classes with low correlations. Though they thought they had created a near-bullet-proof portfolio, they were wrong.
The problem centers on three common myths about correlations, often used to justify portfolio construction:
Regards,
Ted
https://www.etf.com/sections/index-investor-corner/3-correlation-myths-portfolio-construction
