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While stock markets provide investors with significant returns over the long run, rare but unanticipated disasters cause severe short - term losses. One common practice

While stock markets provide investors with significant returns over the long run, rare but unanticipated disasters cause severe short-term losses. One common practice used to manage risk is portfolio diversification. The literature employs the magnitude and sign of the cross-asset correlation to classify assets into three levels: (1) diversifiers, (2) hedges, and (3) safe havens. First, review the literature to define each asset. Next, propose four safe-haven assets against stock risk and explain why their correlation to stock markets is negative.

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