States of flux: How to juggle between government bonds and equities in unprecedented times

Correlations between equity and fixed income are not constant through time and fluctuate between positive and negative depending on the timeframe. For example, the rolling 12-month correlation between gilts and the FTSE All-Share index over the past decade has ranged between +0.7 and -0.8.  During periods of equity market stress, correlations almost always move strongly negative (bonds rally as equities fall), which dampens down losses suffered from equity holdings. This makes them a handy portfolio management tool. Powering past pandemic fatigue: Who will be the winners from the U...