## The gist
The portfolio is a classic three-sleeve bet: equities, real assets, and duration, with the last sleeve doing most of the portfolio math. It is diversified in the sense that the components are not all the same thing, though the bond sleeve is really one trade in two maturities.

## The numbers
- Diversification ratio is **1.88** inceptively, **95.8th percentile**, which is strong; even the shorter windows stay healthy at **1.53–1.65**, so the correlations have not recently turned into a single blob.
- Effective number of assets is **3.52 of 5**, so the weights are reasonably spread, but the **IEF (Government Bonds) / TLT (Government Bond Long-Term)** pair forms one cluster at **0.92** correlation.
- Mean pairwise correlation is **0.12**, helped by the low or negative links between **VTI (Large Cap Blend Equities)** and the bond sleeves.

## The good
- **VTI, DBC, and GLD** sit in distinct economic buckets, which gives the portfolio real cross-driver diversification rather than cosmetic ticker-count diversification.
- The negative correlations of **VTI** versus **IEF** and **TLT** at **-0.25** are doing useful work when equity risk and duration risk are not rising together.

## The bad
- **IEF** and **TLT** are close enough to be the same macro bet in different clothes, so the bond sleeve has less internal diversification than the asset count suggests.
- The portfolio is still dominated by duration, with **55%** in **IEF/TLT**; that makes the whole structure sensitive to the bond term-premium story.

## The ugly
- If inflation and term premium rise while stocks weaken, the usual offset between equities and Treasuries can fail at the same time the two bond holdings remain tightly coupled. That is a tidy way for several diversifying sleeves to discover they were, in fact, all living in the same macro house.

## Next steps
- Portfolios with this correlation profile are often complemented by exposures whose returns are driven less by the level of rates and more by separate risk premia.
- The current structure is already more robust than a simple stock-bond mix; the remaining fragility is mostly inside the government-bond sleeve.


Performance Chart