For several decades now, the correlation between asset prices has generally been increasing. Whether this is caused by globalisation and the free transfer of information, algorithms taking over trading, or just falling interest rates, it makes building a truly diversified portfolio more difficult. Dr Laura Ryan, Head of Research at Ardea Investment Management, says that relative value strategies are one option for achieving stable returns that are not correlated to either equities or fixed interest. Relative value strategies seek to identify situations where related securities have become mispriced relative to one another, and then profit as that gap closes.
Watch the short video below to learn more, including one strategy to manage risk in a portfolio.
