For the last couple of years I’ve routinely stated how important dealing with survivorship bias is in testing. I hope you agree with me that it’s a critical issue that makes it nearly impossible to run a historical test and then being able to repeat those results in the future.
Correlations are an important tool in portfolio construction. But are you aware of the dangers that nearly every analyst ignores? In this post we will review what correlations are, how it can be used to diversify risk and what the dangers are that you have to be aware of.
Many analysts are crying that the markets are overextended. Are they? An accidental look at previous recoveries may tell a different story.
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