The portfolio is moderately diversified, showing a balance between correlated and lowly correlated positions that contribute to risk management. The correlation matrix reveals that the two bond ETFs, IEF and TLT, are highly correlated at 0.92, indicating a strong overlap in their behavior, which could reduce diversification benefits within the fixed income portion. However, these bonds have negative correlations with commodity-related assets like DBC (-0.17 and -0.19) and low positive correlations with equities (VTI) and gold (GLD), which helps to spread risk across different asset classes.

Gold (GLD) and the commodity index (DBC) have a moderate correlation of 0.35, suggesting some shared market influences but enough independence to aid diversification. Equities (VTI) show low correlations with gold (0.07) and negative correlations with bonds (-0.26), reinforcing the portfolio’s exposure to different economic drivers.

Looking at the portfolio’s correlation with individual positions, bonds (IEF and TLT) have the highest correlations with the portfolio (0.59 and 0.63), indicating they play a dominant role in the portfolio’s overall behavior. Equities (VTI) and gold (GLD) also have substantial correlations (0.43 and 0.44), while commodities (DBC) have the lowest correlation with the portfolio at 0.29, suggesting a smaller influence on portfolio returns.

Overall, while the portfolio benefits from including assets with low or negative correlations that enhance diversification, the strong correlation between the two bond holdings suggests some concentration risk within fixed income. The portfolio is not overly concentrated but leans on bonds as a core driver, balanced by exposure to equities, gold, and commodities to mitigate risk across different market environments.

Performance Chart