Risk Without Refuge

Matthew Allgood |

Historically, stocks and bonds have had a negative correlation, allowing bonds to act as a stabilizer during stock market downturns. Recently, however, this relationship has turned positive, meaning the traditional diversification approach may no longer offer the same protection. Similar to 2022, when stocks and bonds move in tandem, both assets can decline simultaneously, leaving portfolios more exposed to risk. 

This shift challenges the old rules of portfolio management that rely on diversification alone. Our RiskFirst® process provides alternative methods of risk management, offering proactive strategies designed to protect in today’s evolving market environment.

Risk Without Refuge

A graph of a stock market Description automatically generated

Source: Bloomberg, Redwood. Data as of 1/16/2025. Date Range From 1/21/2010 - 1/16/2025.

Regards,

Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.

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