FOUR POINTS ADVISORS

Source: Guggenheim Investments

Investing in asset classes that demonstrate little or no correlation to one another may help you enhance diversification and reduce portfolio volatility. 

While diversification can neither ensure a profit nor eliminate the risk of experiencing investment loss, the ideal scenario is to have a mixture of non-correlated asset classes in an attempt to reduce overall portfolio volatility and generate more consistent returns over the long-term.

This table illustrates how various asset classes historically correlate to one another. A correlation of 1.00 indicates perfect correlation, while lower numbers indicate that the asset classes are not correlated and generally do not move in tandem with each other—or, when the market moves down, these asset classes may not fall as much as the market in general, which could mitigate risk in your portfolio.

The 1147 Capital momentum Index combines trend following and diversification in an attempt to generate profits while reducing portfolio volatility.