Closest Stock and Bond Correlation Since 1997 Hinders Diversity
- Worries of higher-for-longer interest rates dent risk demand
- Trend makes it ‘difficult’ to diversify: Bernstein’s McCarthy
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Global stocks and bonds are moving more closely in line with each other than they have in nearly three decades, providing a headache for fund managers seeking to spread their risk.
The rolling one-year correlation between the asset classes is near its highest since 1997, according to data compiled by Bloomberg. The narrowing difference in performance makes it “tricky to diversify equity exposure,” Sanford C. Bernstein strategists Sarah McCarthy and Mark Diver wrote in a note.