Hi all.
What is the closest anyone has come to finding an pair of stocks with a correlation of -1 (or as close as possible)?
Has anyone successfully found a stock (or passive/low-fee ETF) with a strong inverse correlation to the ASX200 over the long term?
My goal is to have just 2 stocks or funds in my portfolio.
(ie, no cash).
Stock A and Stock B are "strongly inversely correlated".
Let's call these stocks "Stock A" and "Stock B".
I want to maintain 50% of the value of my portfolio as Stock A and 50% of the value of my portfolio as Stock B.
- When stock A rises above it's fair value, I expect stock B to fall by roughly the same amount from it's fair value. Stock A will therefore represent > 50% of my portfolio's value, while Stock B will represent < 50%.
- At such a time, I want to sell a proportion of Stock A and immediately purchase more Stock B.
- In doing so, I will have achieved my goal of keeping 50% of the value of my portfolio as Stock A and 50% of the value as stock B, respectively.
What do you think about this hedging strategy?
Would it be effective and cost effective?
I think the most important aspect of this strategy, is the choice of stocks.
==> Can anyone provide some thoughts on how to find stocks with a strong inverse correlation?
Thank you in advance
- Forums
- ASX - General
- Stocks/ETFs with an "Inverse Correlation"
Hi all.What is the closest anyone has come to finding an pair of...
- There are more pages in this discussion • 1 more message in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Featured News
The Watchlist
ACW
ACTINOGEN MEDICAL LIMITED
Steven Gourlay, CEO
Steven Gourlay
CEO
Previous Video
Next Video
SPONSORED BY The Market Online