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Corelations did not converge at 1. If you notice for the two year holding peroid the DJ-AGI out performed the S&P500. So in terms of portfolio diversification by holding the DJ-AGI you beat the market which is mentioned in the article by "When the DJ-AGI is added to a balanced portfolio of equities and bonds, the Sharpe Ratio will increase due to the DJ-AGI having a similar volatility to the S&P 500, as well as higher returns than bonds. The exposure and diversification in commodities along with reducing a portfolio's market risk and increased returns comparable to bonds will create an outstanding complement to any portfolio"
Jan 08 13:47 pm
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All Comments by Kevin B. »ConocoPhillips: More Than Just a Great Stock [View article]
Just because things fall in price together does not mean they are correlated at 1. Nothing is perfectly correlated - ther will always be some error in statistics. You would be up on the market by about 8%+ with a 50% - 50% mix of stocks and the DJ-Index. So diversification is quite benneficial.