Nasdaq isn’t even 10% of the global investing game3 min read 01 Mar 2021, 11:27 PM IST
One of the key metrics we look for when building our portfolios is how correlated our positions are
One of the key metrics we look for when building our portfolios is how correlated our positions are. Do we have many stocks in the overall same category such as Nasdaq, which then means that even if we have 25 such stocks, in effect, because of the very high correlation between them (95-99%), we actually own just one stock! And that’s hugely risky. Therefore, central to building a durable investment strategy is to constantly build several streams of uncorrelated or low correlated assets that still directionally beat the market, and yet have a very low chance of falling together. Think, JSW Steel and IndiaMART together.
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