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Different types of investments that move in the same direction at the same time are referred to as correlated. You can easily see how it would be beneficial at times to have an investment that is not correlated with the stock market or one that moves up when the stock market moves down. Most investments are correlated with stocks however there are certain investments that are negatively correlated with stocks.
Traditionally bond and real estate investments have offered performance that is not closely correlated with the stock markets however this is not always the case. The 2008 stock bear market also took down real estate and most types of bonds. One asset class that is not usually correlated to the equity market is funds that sell stocks short to take advantage of market downturns.
When the market goes down non-correlated funds really shine. In the past hedge funds have been the only way to access such funds but more funds are becoming available to individual investors with smaller amounts to invest. During 2008 many of these funds had excellent performance. In January I wrote about one such fund run by Julie Lang Kirkpatrick. Did you have any investments in your portfolio last year that were non correlated with the stock market?
Prosperous Investing!