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← When Correlations Break Down
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Question
During the 2008-09 global financial crisis, what happened to correlations between most risky asset classes?
1
Correlations spiked toward +1 as investors sold most asset classes simultaneously to raise cash
2
Correlations remained broadly stable, confirming that historical averages are reliable in crises
3
Correlations fell toward zero as investors distinguished between fundamentally sound and unsound assets
4
Correlations between equities rose while correlations between bonds and equities fell, improving diversification
Press 1–4 to pick an answer
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