AQR argues that a positive stock bond correlation is not a good reason to replace bonds with more equity like assets. The piece says the real issue is not correlation alone but hidden beta, noting bonds had a 0.19 equity beta over the five years ended February 28, 2026, far below private credit at 0.70, buffer funds at 0.63, and Bitcoin at 2.09.
A Positive Stock-Bond Correlation Is a Terrible Reason to Add More Equity Risk to Your Portfolio
AQR
Cliff Asness
Research
7 Pages
Key Takeaways
Beta Matters More: Over the five years ended February 28, 2026, bonds had a 0.19 equity beta versus 0.70 for private credit, 0.63 for buffer funds, and 2.09 for Bitcoin.
60/40 Still Equity Led: In 49 of the last 50 years, when the S&P 500 lost money, a U.S. 60 40 stock bond portfolio also lost money.
Positive Correlation Is Normal: AQR notes stock bond correlation was usually negative from 2000 to 2020, but more often positive from 1900 to 2000.
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