Anyone know off the top of their heads which asset clases are negatively correlated with real estate?
Since real estate are positevly correlated with equities, then asset negatevily correlated with equities would be negatively correlated with real estates. Gold is the first choice in my opinion.
Depend which commodity and which equity, I was trading USO, AGQ and DBC during QE 1 and QE 2, it was growing rapidly perfectly positevly correlated with equity market.
the opposite of
Real Estate? thats easy. Fake Estate. The best Fake Estate is obviously in LA with the Kardashians. So to hedge your Real Estate investment, you’re going to have to go long on Kim Kardashian.
I think bonds are somewhat negatively correlated with real estate.
Real estate does well during inflationary periods (assets grow by inflation and rents can be renegotiated each year for residential real estate) and bonds do less well (assuming we’re not talking about TIPS).
It’s not so simple… both are negatively correlated with interest rates so I would imagine it depends on the macro environment.
It depends on market momentum. See gold chart 2001 - 2013. Gold is stated as inflation safe haven in literature but was growing rapidly even in deflation environment after 2007 crisis.
You are right. Bonds and Real Estate are both negatively correlated with interest rates but just consider a plain vanila bond with fix coupons maturing in 30 years.
During that period the owner of real estate may have resetted rents multiple times upward while the bond coupons would have stayed the same.
But, again, you are right that it’s not that simple since mortgages would become more costly and this will wipe out a good portion of the rent increases.
If I remember well we are talking about weak negative correlation in the order of -0.2
CDSs on REITs? i don’t think you’re going to find a negatively correlated asset with a greater negative correlation than -0.2.
Bleh. Real estate and gold both shine in weak currency environments. Inflation is good for both.
You’re probably talking about prices.
I suspect that OP was talking about returns.