Trends in correlation can be a powerful predictor of future volatility and risk in equity markets. As investors continue to grapple with short-term uncertainty, we believe our correlation signal can provide valuable insights into broader market trends.
If there is one thing to be learned from this year’s drawdowns in U.S. equities, it’s that traditional 60/40 portfolios do a comparatively poor job of limiting portfolio losses in the short run. Bradley Krom highlights how investors can combine a dynamic long/short equity strategy with a dynamic bearish strategy to achieve comparable returns with less risk to traditional portfolios.
The equity markets continue to scale new heights, but anxiety around the market’s position reigns. The political season tends to add to investor worries, as do the overall market valuation levels, which many feel are stretched. If you’re worried about overall market volatility and are looking for hedging vehicles, WisdomTree Dynamic Bearish U.S. Equity Fund (DYB) and WisdomTree Dynamic Long/Short Equity Fund (DYLS) are two strategies worth considering.
What makes analyzing alternatives especially challenging is that individual options—even when they are in the same category—can be positioned in very different ways. Furthermore, exposures for any individual strategy can significantly change over time.
A simple, well-known adage says that successful investing is all about “time in the market, rather than timing the market.” Unfortunately, many investors lack investment discipline and have trouble staying invested when volatility increases, and as a result, tend to time the market wrong by selling at adverse times.
The S&P 500 Index fell close to 6% during the first week of trading in 2016, its worst weekly performance start ever! It has many investors wondering: Is this the start of something worse to come, or will the S&P 500 shake it off and continue toward its eighth consecutive year of positive total returns?