Why averages in asset correlations are misleading - First State

Portfolio manager Andrew Harman used the example of correlations between the MSCI World index and global bonds since 1989. It showed equities and bonds had an average correlation of 0.1% in that period, which Harman said was "basically nothing". Source: First State Investments  "They're not correlated, they don't move in sync but when you look at the range, a +1% means things move identically in sync and -1% means they move in the opposite direction," he explained. "When actually span the entire range, you see correlations get as high as 0.8% and a similar level on the negative ...