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Old 03-03-2011, 04:39 PM   #21
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Originally Posted by youbet View Post
Are you actually doing detailed correlation and variability calculations and fine tuning your portfolio to correspond? Or just looking for broad trends and nudging portfolio composition gently from time to time? I'm in the later camp.
As I said, I find looking at correlation more useful in selecting funds to fill out my portfolio, I don't fine tune my holdings at all and never expect to. I did not have REIT's or commodities consciously in my AA at all before I became aware of 'the benefits of low correlation' and I have been pleased with the results over the past 4 years now. It's an aspect of diversification that I was not well aware of.

I don't do any tweaking whatseover based on correlation, and wouldn't recommend it. I only track it in case because it's no effort now that I've set it up in Excel to see if the correlation wanders dramatically from historical norms. If an asset does wander considerably, I'd take it as a possible indicator that asset has wandered from it's mission and the fund may no longer be serving the intended purpose. And then I would research why before acting. Haven't seen it yet, and don't expect to, just monitoring. My 2...

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Old 03-03-2011, 05:16 PM   #22
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Ah, tracking one's portfolio is fun. I often try to compare my holdings in different sectors and foreign markets, just for the heck of it, although I did it mostly by eyeballing.

Usually, by the time I discerned a trend, some holdings were already lagging behind others badly. I would then try to understand why, and see if I should rebalance into the losers.

Not sure if over the years, it would help my return much, but hey, what else does a guy do all day?

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