what are some asset classes like bonds uncorrelated with stocks?

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zetsui
Posts: 66
Joined: Sun Aug 30, 2020 2:20 pm

what are some asset classes like bonds uncorrelated with stocks?

Post by zetsui »

ie NOT correlated

https://www.guggenheiminvestments.com/m ... lation-map

this was hard and confusin to read as negative correlation kind of still correlates...

I ask because some communities (jewish muslim) have issues with investing in interest bearing accounts and think interest automaticlaly means usury

If this is the case what uncorrelated to equities financial instruments can we buy to mitigate the risk of a portfolio? ther are any vanguard indeces that fulfill this requirement?
petulant
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Joined: Thu Sep 22, 2016 1:09 pm

Re: what are some asset classes like bonds uncorrelated with stocks?

Post by petulant »

You can create synthetic bonds with options and various other derivatives, but that may be a bit complex. A market neutral fund may be able to perform this role, but most are probably long/short funds (including Vanguard's).

Another option would be to invest in sector funds with low betas or in factor funds that stress low beta like minimum volatility. These ideally reduce the stock risk exposure without actually reducing stock exposure.

Is the problem truly the payment of a coupon, but a time-price issue might be okay? Zero-coupon bonds and treasury bills could be an option in that case. They are sold at a discount and mature at face value, otherwise earning no interest.
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Brianmcg321
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Re: what are some asset classes like bonds uncorrelated with stocks?

Post by Brianmcg321 »

Gold, real estate, fine art.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
investing engineer
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Re: what are some asset classes like bonds uncorrelated with stocks?

Post by investing engineer »

May I ask why negatively correlated assets are out of the picture? They provide stronger hedge than zero correlated.
alex_686
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Re: what are some asset classes like bonds uncorrelated with stocks?

Post by alex_686 »

zetsui wrote: Sun Aug 30, 2020 8:58 pm ie NOT correlated

https://www.guggenheiminvestments.com/m ... lation-map

this was hard and confusin to read as negative correlation kind of still correlates...

I ask because some communities (jewish muslim) have issues with investing in interest bearing accounts and think interest automaticlaly means usury

If this is the case what uncorrelated to equities financial instruments can we buy to mitigate the risk of a portfolio? ther are any vanguard indeces that fulfill this requirement?
2 points.

Correlations are tricky. They are not stable and probably doesn’t mean what you think it means. 80% is considered pretty good and 60% is considered darn good. We can debate if you can find anything below 20% and has a positive return.

As for the second part, what legal and religious / moral constraints do you operate under? The specific answer varies widely. There are instruments that have the same characteristics of bonds but are not bonds.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
stan1
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Re: what are some asset classes like bonds uncorrelated with stocks?

Post by stan1 »

There is a US based indexed soukak (sharia compliant bond) ETF now (SPSK).

I won't make any claims on whether it is diversified, uncorrelated, or prudent.

Agree direct real estate and gold are other possibilities.
Topic Author
zetsui
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Joined: Sun Aug 30, 2020 2:20 pm

Re: what are some asset classes like bonds uncorrelated with stocks?

Post by zetsui »

investing engineer wrote: Sun Aug 30, 2020 9:17 pm May I ask why negatively correlated assets are out of the picture? They provide stronger hedge than zero correlated.
That's a good point. Unless t here's some volatility neither one of us is considering in negatively correlated assets
Topic Author
zetsui
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Joined: Sun Aug 30, 2020 2:20 pm

Re: what are some asset classes like bonds uncorrelated with stocks?

Post by zetsui »

stan1 wrote: Sun Aug 30, 2020 9:21 pm There is a US based indexed soukak (sharia compliant bond) ETF now (SPSK).

I won't make any claims on whether it is diversified, uncorrelated, or prudent.

Agree direct real estate and gold are other possibilities.
neither would i . they tend to be high fee and low diversity. and why i hate them

maybe time to start my own financial comapny? :D
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