"Diversification and Correlation During Market Crisis Periods
During periods of market stress there tends to be two factors that influence the price of investments:
- there is a flight to quality and
- a high demand for liquidity
A recent paper by Barclays Global Investors titled, Is Diversification Dead?, provides more detail on the conundrum for investors as it relates to the diversification issue.
Is Diversification Dead
As I have written several times before, when the market rallies off of a bottom during these corrective phases, the higher quality equity investments will likely lag the broader market returns though.
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