The more an asset has payoffs that are positively correlated with future consumption (and so negatively correlated with SDF or marginal utility of tomorrows consumption), the more its returns should be higher.
Im not sure I get the intuition. Why would I have to be compensated if an asset’s payoffs vary with my consumption? Isnt it normal if the payoffs i get from the asset covary with my consumption, why would this be considered a risky thing..?
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Why do you keep asking the same question without changing or clarifying your actual query?
For starters – you seem to have cause and effect backwards. Also the premise is wrong – an asset which positively covaries with consumption is not considered risky. It simply has lower utility and so is priced lower than one which negatively covaries.
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