# correlation coefficient (blogs) — RSS Amplifier Recent posts from the 1 feeds in the RSS Amplifier directory that cover correlation coefficient. Page: Feed: --- ## [The Inflation Compass Model](https://cssanalytics.wordpress.com/2026/07/27/the-inflation-compass-model/) _2026-07-27 · david varadi · CSSA_ by David Varadi, MBA, CFA When inflation shifts from low to high, a traditional 60/40 equity-and-bond allocation breaks down because both fall together. You need real assets to act as the ballast. — Ray Dalio Inflation is one of the most powerful forces in asset allocation—and one of the hardest to measure in real time.Everyone \[ \] ## [The Growth and Inflation Sector Timing Model](https://cssanalytics.wordpress.com/2025/03/20/the-growth-and-inflation-sector-timing-model/) _2025-03-20 · david varadi · CSSA_ “big forces to worry about: growth and inflation. Each could either be rising or falling, so I saw that by finding four different investment strategies—each one of which would do well in a particular environment (rising growth with rising inflation, rising growth with falling inflation, and so on)—I could construct an asset-allocation mix that was \[ \] ## [Iterative PSD Shrinkage (IPS)](https://cssanalytics.wordpress.com/2025/01/21/iterative-psd-shrinkage-ips/) _2025-01-21 · david varadi · CSSA_ \*\*UPDATE: it was recently brought to my attention by Roman Rubsamen who does an excellent job of curating the large body of research in optimization and mathematics and of Portfolio Optimizer that the same general methodology was created and extensively tested by Higham in 2016 (the shrinkage targets in IPS and correlation thresholds are different). \[ \] ## [Drawdown Implied Correlations Part 2: Generalized Downside Implied Correlations](https://cssanalytics.wordpress.com/2025/01/09/drawdown-implied-correlations-part-2-generalized-downside-implied-correlations/) _2025-01-09 · david varadi · CSSA_ In the previous post I introduced a Drawdown Implied Correlation (DIC) that is a joint time-series measurement which converts maximum drawdowns into a correlation coefficient using a simple formula derived from portfolio math. The DIC had some unique features such as a point-in-time reference to the exact point of maximum drawdown, and a triple reference \[ \] ## [Drawdown Implied Correlations (Part 1)](https://cssanalytics.wordpress.com/2024/12/23/drawdown-implied-correlations-part-1/) _2024-12-23 · david varadi · CSSA_ Diversification is a concept that is critical to most asset managers and traders. The foundation of this body of research is built upon the Pearson correlation coefficient, which is the most popular metric to determine whether adding an asset to a portfolio might enhance diversification. Despite its widespread use, most investment practitioners recognize its limitations. \[ \]