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The Convexity Maven "How Will I Know..." by Harley S. Bassman March 19, 2018 Excerpt:  Risk Parity’s tremendous success is revealed via the –pummelo line- of the SPX price in the chart above and the –santol line- of the price of a constant 30-year treasury bond. Risk Parity portfolios have been ‘levered long’ assets that have both increased in value. (We used to call this a Texas-hedge.) Here is the bottom line: If this correlation turns negative so that both stock and bond prices decline, Risk Parity portfolios will be modified to reflect these new correlations and volatilities. In simple terms, they will sell. Risk Parity portfolios will not remain levered long if both assets are declining. 
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