What defines an asset class? Correlations? How do we "know" stocks and bonds are different asset classes?

Certainly not correlations or any quantitative measure. Asset classes are defined by convention/history and law more than anything else.Companies got used to issuing fractional ownership with voting and dividend right and called that "stock", and fixed promises of repayment on borrowed money became known as "loans" or "bonds". Governments then found reasons over the years to treat these two things differently for tax, accounting, and regulatory purposes, which further defined the differences between them and created jobs for thousands of lawyers to pore through millions of words of statutes and court cases to figure out the difference, at the expense of issuers and investors. Meanwhile there have been issues of preferred stock, that look like bonds, and the dawn thousands of people like me whose job it is to create bonds that look and behave like stock.There are also other things you can point to like real estate, commodities, currencies (or do you call them foreign bonds), funds, and art that people may consider different types of investments by convention, but the choice of which "asset class" to pigeon hole them into is really no deeper than that.So the short answer to your question is "because we say so". If you have no tax or regulatory constraint to choose one asset class over another, forget about the label and evaluate the investment itself for its own liquidity, economics, volatility, correlation, hedgeability and other investment merits which you are smart enough to quantify.

OK thanks; so asset classes are "historical accidents" rather than hard statistical definitions I guess?