Studies of correlations among monthly U.S. bond price index returns have found
A) low correlations between investment grade bonds and high yield bonds.
B) high correlations between investment grade bonds and high yield bonds.
C) low correlations between various investment grade bond indexes.
D) negative correlations between investment grade bonds and high yield bonds.
E) None of these are correct.

Question

Quizplus · Accepted Answer

Studies have shown that investment grade bonds and high yield bonds have low correlations, meaning they do not move in tandem with each other. This makes them attractive options for diversifying a bond portfolio.

Studies of Correlations Among Monthly U