1 engine

Four continents, one engine

Spreading your equities across the US, Europe, Japan and emerging markets protects against backing the wrong leader. It does not protect against a crash.

A return engine is a group of investments that rise and fall for the same reasons. copio's portfolio checker counts two asset classes as one engine when their expected correlation exceeds 0.6. In the market assumptions copio uses (copio CMA, Q4 2026, with J.P. Morgan LTCMA 2027 euro correlations), the major equity regions are correlated between 0.61 and 0.74 with each other (J.P. Morgan).

Expected correlation between equity regions. US-Euro area 0.74, US-Japan 0.71, US-Emerging 0.62, Euro area-Japan 0.65, Euro area-Emerging 0.71, Japan-Emerging 0.61. Above 0.6, copio counts two asset classes as one return engine. Euro government bonds: 0.15 to 0.23 with these regions. Gold: −0.18 to 0.05. Source: J.P. Morgan LTCMA 2027 euro correlations, as used in the copio CMA, Q4 2026.

So they form a single engine. Euro-area government bonds (0.15 to 0.23 with equities) and gold (-0.18 to 0.05) form others.

Two problems, two answers. Leadership risk, betting a decade on a single market, shrinks when you spread your equities. Crash risk, watching everything fall together, only shrinks with another engine.

copio's portfolio checker counts the engines in your own holdings.

General information published by copio. It is neither investment advice nor a personal recommendation. Past performance is not a guide to future performance.