Today’s chart comes from the MarketSci blog, and illustrates the increasing correlation between commodities and equities:
This chart shows the 3 year monthly correlation of the S&P500 (the broadest US equity index) and the Goldman Sachs commodity index, from 1970. Although the GS Index is not as diversified as the CRB Index, the comparison is similar.
The correlation has increased tremendously since the GFC, surpassing the stagflation period in the late 1970’s to early 1980’s.
The risk on/risk off undollar meme kind of puts a large dent in conventional asset allocation techniques….