Simply put, as the values of some asset classes decline, values of other assets may decline at a slower rate or even increase, which helps dampen volatility and increase potential for generating attractive long-term risk adjusted performance.

For advisors, the challenge is often finding additional asset classes with performance that is not tied to the performance of other assets, or that is, uncorrelated to other asset classes.

Gold is among a handful of asset classes that have traditionally been embraced for portfolio diversification. It is considered to be less sensitive to inflation and, unlike equities, can be a safe haven when the economy collapses. Yet, it’s correlation to the performance of The S&P 500 has recently increased, which has diminished its role in portfolio diversification.

It isn’t the only asset class that has seen its correlation to equities increase. Indeed, during the bear market following the 2008 subprime mortgage crisis most asset classes tanked and correlations increased.

Assets that have identical performance are said to have a correlation of 1. In the aftermath of the subprime crisis, the correlation of developed international markets to the S&P 500 climbed to 0.93, according to Vanguard. Sectors within the S&P 500 also experienced a decrease in correlation to the overall market benchmark. Treasury securities, however, were an exception, having a -0.3 correlation to U.S. equities.

With that in mind, advisors may dismiss the role of diversifying portfolios. Yet, doing so overlooks the fact that correlations among asset classes change over time, so even if correlations may increase during certain bear markets, they are likely to decrease during other times and play an important role in managing risk.

That can be even more important during market rallies when equity valuations climb. For example, the intra-stock correlation was relatively high in June but dropped considerable in July as investors became more focused on stock picking and less focused on wide-scale influences, such as Fed policies, reports The Business Insider. Correlations among S&P 500 sectors and correlations of international equities and high yield bonds to the broader market have also declined substantially over the past few months.

For advisors, the changing nature of asset class correlations can make portfolio management tricky. When rebalancing portfolios to maintain target asset allocations, advisors may want to occasionally evaluate the correlations of different asset classes in order to fine tune their investment recommendations.

At times, when asset classes become highly correlated, advisors may want to evaluate if they should decrease their allocations to higher risk assets. This process, of course, can be challenging as each client has unique investment goals, time horizons and personal levels of risk tolerance. Yet, the dynamic nature of asset correlations can also play a role in pursuing new clients and strengthening relationships with existing clients.

As correlations changes, advisors may want to reach out to their clients and explain that changes in portfolio weightings should be adjusted to reflect the changing nature of how different types of investments perform. By doing so, advisors will have a competitive advantage over other advisors who fail to use updated correlation information when building portfolios. When meeting with prospects—especially prospects who haven’t worked with advisors--explaining that correlations among asset classes change over times can illustrate how an advisor can add value by using market data that can help manage portfolio volatility.