negative price correlation to stocks and bonds
To provide true diversification, an investor must have a portfolio that contains investments with negative price correlation. That is, when the price of one falls, the other rises. Farmland is one of the few assets that have a negative price correlation with stocks and bonds. Over the years, the low in price of one has been offset by the high in price of the other. Assembling a portfolio of negatively correlated assets is the only way to achieve true diversification. An investor may have a thousand different investments but if they have a positive price correlation, there will be no true diversification and reduction of risk.