Wednesday, February 18, 2015

Last correction in treasuries gives an opportunity to increase treasury position

Sharp correction in long-term treasuries (IEF, TLT, ZROZ) gives another opportunity to enter Treasuries vs Equities pair trade. Or you may just increase treasury position in your portfolio to be prepared for possible stock market downturn.

This pair chart is volatility-normalized, it shows cumulative profit/risk balance between stocks and long-term treasuries. Treasuries still look cheaper than stocks, and year momentum is on the side of treasuries.

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