Diversification: does it really fail, when you need it most?

Diversification has been labeled as the “only free lunch in investment management.” This conventional knowledge has been under attack for many years as investors observed that correlations of risky assets have been rising during periods of increasing systematic risks. Higher correlations are painful...

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Detalles Bibliográficos
Autor principal: Scherer, Bernd
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Palgrave Macmillan UK 2020
Materias:
Invited Editorial
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7595051/
http://dx.doi.org/10.1057/s41260-020-00190-1
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author Scherer, Bernd
author_facet Scherer, Bernd
author_sort Scherer, Bernd
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description Diversification has been labeled as the “only free lunch in investment management.” This conventional knowledge has been under attack for many years as investors observed that correlations of risky assets have been rising during periods of increasing systematic risks. Higher correlations are painful, but they usually do not happen ceteris paribus. In times of very volatile markets, even high correlations will proof to be useful and diversification benefits might increase rather than decrease. What are the conditions for this to happen?
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spelling pubmed-75950512020-10-30 Diversification: does it really fail, when you need it most? Scherer, Bernd J Asset Manag Invited Editorial Diversification has been labeled as the “only free lunch in investment management.” This conventional knowledge has been under attack for many years as investors observed that correlations of risky assets have been rising during periods of increasing systematic risks. Higher correlations are painful, but they usually do not happen ceteris paribus. In times of very volatile markets, even high correlations will proof to be useful and diversification benefits might increase rather than decrease. What are the conditions for this to happen? Palgrave Macmillan UK 2020-10-29 2020 /pmc/articles/PMC7595051/ http://dx.doi.org/10.1057/s41260-020-00190-1 Text en © Springer Nature Limited 2020 This article is made available via the PMC Open Access Subset for unrestricted research re-use and secondary analysis in any form or by any means with acknowledgement of the original source. These permissions are granted for the duration of the World Health Organization (WHO) declaration of COVID-19 as a global pandemic.
spellingShingle Invited Editorial
Scherer, Bernd
Diversification: does it really fail, when you need it most?
title Diversification: does it really fail, when you need it most?
title_full Diversification: does it really fail, when you need it most?
title_fullStr Diversification: does it really fail, when you need it most?
title_full_unstemmed Diversification: does it really fail, when you need it most?
title_short Diversification: does it really fail, when you need it most?
title_sort diversification: does it really fail, when you need it most?
topic Invited Editorial
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7595051/
http://dx.doi.org/10.1057/s41260-020-00190-1
work_keys_str_mv AT schererbernd diversificationdoesitreallyfailwhenyouneeditmost

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