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negatively correlated assets, real life examples

Thread starter #1
Hi,
I just finished watching the Elton-Gruber video on portfolio theory. Does anyone know any real life examples of negatively correlated stocks or assets? How do we spot them?
Thank you very much,
PS What does the acronym PQ in GARP.FRM.PQ.P1 stand for?
 

QuantMan2318

Active Member
Subscriber
#2
I cannot vouch for the accuracy of this, perhaps, we can say that the treasury securities and the Equity market are negatively correlated, I would assume that if we chart the correlation between the S and P 500 Index (the proxy for the market) and the T bills, we can find negative correlation between the two. However, this is merely theoretical and there have been instances when they have moved in the same direction

Therefore, I would ask you to look at times of crisis and then look at the T bills vs the S and P 500, then there is a greater likelihood of strong negative correlation between the two. Another strong candidate for negatively correlated security with the equity market is Gold and Gold ETF, so whenever, investors look for safe havens in time of crisis then there is a strong chance that there exists negative correlation between what the market thinks as safe haven and the security in question

During the Brexit, the VIX rose to an all time high while the pound fell, so you can take the VIX index and the Pound as examples of negatively correlated assets in this special event. Also whenever the demand for sovereign govt. Bonds increase whenever the market tanks, then the index and the Bonds are examples of negatively correlated assets. You can spot negatively correlated assets by looking at the Price charts and correlation charts on a Bloomberg terminal or from any web site

Here is an interesting article on WSJ on VIX and the Pound
http://www.wsj.com/articles/brexit-is-a-boon-for-volatility-traders-1467062365
https://www.bionicturtle.com/forum/threads/financial-implications-of-the-brexit.9652/

PQ - Practice Question, I presume (you can never be sure :))
 

Nicole Seaman

Chief Admin Officer
Staff member
Subscriber
#4
Hi,
I just finished watching the Elton-Gruber video on portfolio theory. Does anyone know any real life examples of negatively correlated stocks or assets? How do we spot them?
Thank you very much,
PS What does the acronym PQ in GARP.FRM.PQ.P1 stand for?
@Sergio Guerrero

To answer your question about what the prefix GARP.FRM.PQ.P1 stands for, it is a prefix that we use to tag the question being asked as a question that is on one of the GARP practice exams. Please note: I removed the prefix that you added since this question is not in reference to a GARP practice exam question ;)

Thank you,

Nicole
 
Thread starter #5
I cannot vouch for the accuracy of this, perhaps, we can say that the treasury securities and the Equity market are negatively correlated, I would assume that if we chart the correlation between the S and P 500 Index (the proxy for the market) and the T bills, we can find negative correlation between the two. However, this is merely theoretical and there have been instances when they have moved in the same direction

Therefore, I would ask you to look at times of crisis and then look at the T bills vs the S and P 500, then there is a greater likelihood of strong negative correlation between the two. Another strong candidate for negatively correlated security with the equity market is Gold and Gold ETF, so whenever, investors look for safe havens in time of crisis then there is a strong chance that there exists negative correlation between what the market thinks as safe haven and the security in question

During the Brexit, the VIX rose to an all time high while the pound fell, so you can take the VIX index and the Pound as examples of negatively correlated assets in this special event. Also whenever the demand for sovereign govt. Bonds increase whenever the market tanks, then the index and the Bonds are examples of negatively correlated assets. You can spot negatively correlated assets by looking at the Price charts and correlation charts on a Bloomberg terminal or from any web site

Here is an interesting article on WSJ on VIX and the Pound
http://www.wsj.com/articles/brexit-is-a-boon-for-volatility-traders-1467062365
https://www.bionicturtle.com/forum/threads/financial-implications-of-the-brexit.9652/

PQ - Practice Question, I presume (you can never be sure :))
Thank you very much!
 
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