One of the risks investors should consider is how their human (or labor) capital correlates with equity risks. Given the risk of correlation, it is logical to conclude that human capital could have explanatory power when it comes to stock returns.

Sean Campbell, Stefanos Delikouras, Danling Jiang and George Korniotis contribute to the literature on this subject through their study, “The Human Capital That Matters: Expected Returns and High-Income Households,” which appears in the September 2016 issue of The Review of Financial Studies.

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