It is important to get our definitions right, and there seems to be consensus on some simple ideas about what makes an asset a hedge or a safe asset. We can apply these definitions to an asset or to a strategy.
A weak hedge asset - negative conditional correlation with another asset or portfolio.
A strong hedge asset - negative conditional correlation and positive coskewness with another asset or portfolio.
A weak safe asset - uncorrelation with another asset or portfolio during times of stress.
A strong safe asset - negative conditional correlation with another asset or portfolio during times of stress.
If you apply this definition to trend-following, it can be both a hedge and a safe asset. Gold is currently a safe asset. We can make some strong general statements on the characteristics of an asset or strategy.
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