The stock-to-bond correlation is at the core of multi-asset portfolio construction, and from 2000 to 2020, it was negative. This makes the portfolio construction process much easier and allows you to enjoy decent returns with less risk or volatility. However, over the past few years, we have seen a dramatic rise in stock-bond correlations, which is a clear challenge for portfolios. 2022 was a tough year as both stocks and bonds fell simultaneously. And while nobody seems to be complaining about stocks going up and bonds doing okay, correlations have continued to climb.

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