The second thing we want is, if we wanted something that was different than a traditional bond portfolio, we wanted each manager individually to have very low correlation relative to traditional bond indexes, like the Barclays Ag.

FORBES: What Is a "Flexible" Bond Fund?

Once you know the average return, the standard deviation of each index and the correlation coefficient between each pair of indexes, the rest is math.

FORBES: Asset Allocation and the Efficient Frontier

The lower the correlation, the greater the benefit of blending two different indexes in a portfolio.

FORBES: Asset Allocation and the Efficient Frontier