JMF Capstone Wealth ManagementCorrelations Can Be Predictive – JMF Capstone Wealth Management https://www.jmfcapstone.com An Alabama registered investment advisor Fri, 21 Nov 2025 19:30:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Correlations Can Be Predictive https://www.jmfcapstone.com/2015/11/02/correlations-can-be-predictive/ https://www.jmfcapstone.com/2015/11/02/correlations-can-be-predictive/#respond Mon, 02 Nov 2015 09:00:34 +0000 http://evolvemypractice.com/?p=2313 Academic researchers have presented theory, as well as empirical evidence, suggesting certain linkages between equity risk and the Treasury bond market, a relationship that clearly has important implications for investors’ understanding of markets and portfolio design. Studies, for example, have found that greater economic uncertainty leads both to higher equity volatility and increased motives for...

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]]> Academic researchers have presented theory, as well as empirical evidence, suggesting certain linkages between equity risk and the Treasury bond market, a relationship that clearly has important implications for investors’ understanding of markets and portfolio design.

Studies, for example, have found that greater economic uncertainty leads both to higher equity volatility and increased motives for precautionary savings that can depress interest rates. Moreover, links between the stock and bond markets have been attributed to flight-to-quality (FTQ) or flight-from-quality (FFQ) as some investors move between riskier stocks and safer Treasurys due to changing perceptions of risk.

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