Everything's correlated? :(

[lentus]

Let's say I want to play risk-off (just an example, let's not deepdive into whether that's a good idea etc). Great.

I'm long:
gold
silver
yen
swissie
long-term govt bonds of developed nations

Short:
equities
oil

Isn't all of this highly correlated and effectively just one trade? If so, how do I find uncorrelated asset classes?

 

[Nobert]

https://www.investing.com/stock-scr...exchange::a|eq_beta::-1,0.5<turnover_volume;1

https://www.elitetrader.com/et/threads/what-is-a-beta.335456/

 

[lentus]

https://www.investing.com/stock-scr...exchange::a|eq_beta::-1,0.5<turnover_volume;1

https://www.elitetrader.com/et/threads/what-is-a-beta.335456/

Not very relevant to my question.

 

[tomorton]

Yes, most large markets are more or less correlated with risk, positively or negatively and traders should consider whether they want the risk of multiple correlating positions.

But apart from that what is your objection to correlating markets? Correlation is a useful indicator that obviously doesn't print anything in uncorrelating market charts.

 

[lentus]

Yes, most large markets are more or less correlated with risk, positively or negatively and traders should consider whether they want the risk of multiple correlating positions.

But apart from that what is your objection to correlating markets? Correlation is a useful indicator that obviously doesn't print anything in uncorrelating market charts.

Because I don't want to have essentially one big trade instead of multiple different smaller ones.

 

[Robert Morse]

Let's say I want to play risk-off (just an example, let's not deepdive into whether that's a good idea etc). Great.

I'm long:
gold
silver
yen
swissie
long-term govt bonds of developed nations

Short:
equities
oil

Isn't all of this highly correlated and effectively just one trade? If so, how do I find uncorrelated asset classes?

This is the CME QuickStrike Cross Correlation allocation tool.

 

[IAS_LLC]

If everything is highly correlated, monitor the correlation and run a stat-arb when it diverges. In theory, that should de-correlate your absolute returns (I think...I'm not a spreader).

 

[wrbtrader]

Let's say I want to play risk-off (just an example, let's not deepdive into whether that's a good idea etc). Great.

...Isn't all of this highly correlated and effectively just one trade? If so, how do I find uncorrelated asset classes?

To answer your thread title question...

Everything is not correlated. For example, Bitcoins, Penny Stocks and BUND futures.

wrbtrader

 

[Wheezooo]

Correlation is a dirty word.

 

[lentus]

This is the CME QuickStrike Cross Correlation allocation tool.

wow, nice!