Intermarket analysis
Module Units
- 1. Introduction
- 2. Intermarket analysis and Business Cycles
- 3. Are Asset Classes Correlated?
- 4. What Affects the Movements of Asset Classes?
- 5. Business Cycle Affecting Macro Factors
- 6. Interrelation amongst various asset classes
- 7. Intermarket Analysis for Retail Stock Market Investor
- 8. Analyse Inter-relationship between Stocks and Other Asset Classes
- 9. Timing the Markets According to Business Cycles
- 10. Conclusion
Are Asset Classes Correlated?
Bond yields and stock prices are said to be inversely correlated. This means that an investor looking to buy equities, can get a confirmation via reducing interest rates.
Look how beautifully this has played over the long term in the US stock market returns and US Bond Yields.
Similarly, bond yields and commodities are positively correlated due to the common factor "Inflation" influencing both of them.
Notice how both CRB index (an index that tracks major commodity prices) has risen along with the bond yields. Hence an investor looking to buy commodities, can get a confirmation via looking if the bond yields are rising or not.
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