I'm looking for ETFs that are fairly uncorrelated to the market. A correlation of less than 0.2 would be fantastic but I'm not too picky. I don't need high returns but smaller drawdowns would be great.

Treasury ETFs like TLT are fairly uncorrelated but I'm looking at non-bond non-commodity alternatives.

I've been screening and I've found one or two uncorrelated alternative ETFs with decent sharpe ratios. But I'm finding it difficult to find uncorrelated ETFs that are alternative & uncorrelated.

Does anyone have any good ETFs that would provide a decent level of uncorrelation? I can't invest in HFs or PE.

The main reason is that the stock-bond correlation hasn't always been like it currently is. I'm looking at other alternatives in case it reverts back to a pre-1980s high inflation era.

This post was edited on 10/26/21 at 3:19 pm

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Posted by slackster

Houston

Member since Mar 2009

85430 posts

Posted on 10/26/21 at 5:14 pm to AmericanPsycho99

The tough part about this is that you’re going to be looking at 10-20 year correlations in an effort to avoid high inflation that was 40 years ago - it’s apples to oranges.

You can look at what worked during high inflation though - companies with rising dividends. Obviously crypto is a modern option too. Hard assets would be another option.

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Posted by AmericanPsycho99

Member since Sep 2021

121 posts

Posted on 10/26/21 at 6:37 pm to slackster

quote:
The tough part about this is that you’re going to be looking at 10-20 year correlations in an effort to avoid high inflation that was 40 years ago - it’s apples to oranges.

For some alternative ETFs, it's not even 10 years. I found one ETF that has the explicit purpose of providing uncorrelated returns but even then, the data only goes back 3 years. It's looking good so far but 3 years is hardly any time to conclude that it's working.

I've found some low correlation consumer staples that are uncorrelated but the drawdowns are still significant. The data for them goes back to 1994 which again, is still not representative of a high inflation environment.