Have you considered the possibility that the causality between the VIX and SPX isn't the direction you think it is?
Option volatility
- Thread starter athlonmank8
- Start date
it isn't?
may be,u can just open and compare the charts VIX vs SPX for the last 3 months,and then we can argue again its not,or it is......
there are more interesting correlations also......compare VIX with VIN and with VIF,...... when u have correction.....how IV horizontal skew goes into play,and how u can make an edge out of it
I am not sure I understand you... Can you tell me how you intend to determine the causality in the relationship between any two given indices based on their two charts (correlations)?Quote from acen1975:
it isn't?
may be,u can just open and compare the charts VIX vs SPX for the last 3 months,and then we can argue again its not,or it is......
there are more interesting correlations also......compare VIX with VIN and with VIF,...... when u have correction.....how IV horizontal skew goes into play,and how u can make an edge out of it
In what way is my question 'elevated', pray tell?
Imagine a very simplistic world where VIX is an estimate of the expected volatility of an equity portfolio. If the VIX goes lower, could it conceivably lead to a higher expected risk-adjusted return on the portfolio? In this hypothetical world, would you still say that the correlation between the VIX and the SPX is stupid?
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not only is stupid,but u can make money out of it(if u know how)......
but till now u were sayng,that there is no correlation.......first figure it out......
joker for u:
risk adjustments sould increase with the gain a portfolio manager makes on his trades.......but its the opposite-as the market goes higher,the same managers tend to decrease their hedge,instead of increasing it....and when u have a correction,the same people start to buy hedge like crazy.....
and instead of buying cheap,when market is up,they buy expensive,on the way down..........and u can read all this in the charts,that i mentioned.
i also mentioned how u can take advantage out of it........u dont have to be rocket scientist.....just need to understand options a little more deeply,and to look for such correlations.......
there is another thing-u might have noticed,that the dollar dominates US equity markets now...dolar falls,stocks go up.......but the European equities are not dominated by the euro,but from american equities.....this is another paradox,from which u can benefit.....if u know how....
joker:
if dolar goes down,google goes up,if the dollar goes up,daimler goes down,but more-once from the correlation,once,because its european company-u multiply the down turn by the dollar appreciation ......
and there is a nice game -intermarket hedge,by expoiting this paradox......
if u know how
Duuuuude, I think you're drunk...
When did I ever say 'there is no correlation'? I used the term "causality". I hope you can understand the not-so-subtle difference between the two.
As to the rest of your comments, I don't quite know what to say, apart from 'Good luck!'...
u r hell of a linguist.have u ever thought of teaching english?i think u be very good at it.
i dont even expect to understand me .
anyway,i'll try to explain it to a linguist,not a trader:
u have stocks of american company .u want to hold them long term,but u are scared,that there's might accur a short squeeze in the dollar-u believe in continuing carry trade,but need a temprorary short sqeeze hedge.....
instead of closing part of your positions,or buying hedge on them,u can use intermarket correlation hedge.
something,that trades in euros,instead of dollars........
if still dont understand what i am talking about,u can compare charts.......casualty in correlation,correlation in causalties or causalty in the casualties
with the drop at the end of last month,SPX dropped 5%,aapl dropped 10%,google dropped 6%......DAI DROPPED 20%..........
not a bad idea to give yourself an edge,taking advantage of the correlation between intermarkets and the currency swaps........
if this is hard your linguistic logic to understand,you can start with easy stuff,like what is quanto option i why and when to use them
Rightie-o... This is where I throw in the towel.
Best of luck to you!
Best of luck to you!