Stock and Bond Mining
Stocks and bonds are two most important asset classes traded on financial markets, which play a crucial role in asset allocation and portfolio management. It is now the stylized fact that stock-bond relations have changed dramatically over the last two decades, shifting from sizably positive to predominantly negative in the late 1990s (Baele et al., 2010, Bansal et al., 2014, Chiang et al., 2015, Lee et al., 2006).
The main difference between stocks and bonds is that stocks give you partial ownership in a corporation, while bonds are a loan from you to a company or government. Another big difference is how they generate profit: stocks must appreciate in value and be sold later on the stock market, while most bonds pay fixed interest over time.