Why did both stocks and bonds crash on 9Sep16 despite the negative correlation?

[OptionGuru]

Well, perhaps to you, but I have forgotten it as you be just another day of trading.

Then why are you participating in this thread?

 

[globalarbtrader]

Both stocks and bonds have a historical negative correlation. Why did both crash so hard on 9Sep2016?

a) the correlation isn't perfectly, -1, and never has been. An up day for stocks isn't automatically a down day for bonds, and vice versa.
b) correlations change. Last years correlation estimate isn't a perfect predictor of next years.
c) Correlation is a linear estimate of the relationship between two variables. It's perfectly possible to have a negative correlation, but positive correlation in the lower tail (eg both sell off sharply together)
d) "Risk parity" funds holding both stocks and bonds
e) Any other fund doing volatility targeting.

GAT

 

[i960]

f) ZIRP/NIRP/QE