This type of investor should clearly treat
volatility as a risk, since a more volatile return stream is likely to result in a worse actual financial outcome, whether it should do so in theory or not.
For this investor type the view that ignores
volatility as a risk is correct.
Conventional wisdom views
volatility as risk.
However, Malkiel still believes in
volatility as a risk measure.
Not exact matches
The
volatility of bitcoin has made it more useful
as a vehicle for speculation than
as a currency, say critics — when the value can change drastically from hour to hour, it introduces undesirable
risk for sellers and buyers alike.
«This is typical of a late cycle expansion which is another reason why multiples will be lower
as higher
volatility typically demands a higher equity
risk premium.
«The summer should be hot for US equity and oil
volatilities,
as vulnerable positioning and geopolitical
risks are major looming threats,» he said in a note on Friday.
«We see weak core free cash flow
as too structurally challenged to de-lever the balance sheet, leaving the company prone to
risks around further contingent liabilities, and / or capital markets
volatility.»
Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including the
risk that we may not obtain sufficient orders to achieve our targeted revenues; price competition in key markets; the
risk that we or our channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders
as we experience wide fluctuations in supply and demand; the
risk that our commercial Lighting Products results will continue to suffer if new issues arise regarding issues related to product quality for this business; the
risk that we may experience production difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; our ability to lower costs; the
risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand; the
risk that longer manufacturing lead times may cause customers to fulfill their orders with a competitor's products instead; the
risk that the economic and political uncertainty caused by the proposed tariffs by the United States on Chinese goods, and any corresponding Chinese tariffs in response, may negatively impact demand for our products; product mix;
risks associated with the ramp - up of production of our new products, and our entry into new business channels different from those in which we have historically operated; the
risk that customers do not maintain their favorable perception of our brand and products, resulting in lower demand for our products; the
risk that our products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs, including costs associated with warranty returns or the potential recall of our products; ongoing uncertainty in global economic conditions, infrastructure development or customer demand that could negatively affect product demand, collectability of receivables and other related matters
as consumers and businesses may defer purchases or payments, or default on payments;
risks resulting from the concentration of our business among few customers, including the
risk that customers may reduce or cancel orders or fail to honor purchase commitments; the
risk that we are not able to enter into acceptable contractual arrangements with the significant customers of the acquired Infineon RF Power business or otherwise not fully realize anticipated benefits of the transaction; the
risk that retail customers may alter promotional pricing, increase promotion of a competitor's products over our products or reduce their inventory levels, all of which could negatively affect product demand; the
risk that our investments may experience periods of significant stock price
volatility causing us to recognize fair value losses on our investment; the
risk posed by managing an increasingly complex supply chain that has the ability to supply a sufficient quantity of raw materials, subsystems and finished products with the required specifications and quality; the
risk we may be required to record a significant charge to earnings if our goodwill or amortizable assets become impaired;
risks relating to confidential information theft or misuse, including through cyber-attacks or cyber intrusion; our ability to complete development and commercialization of products under development, such
as our pipeline of Wolfspeed products, improved LED chips, LED components, and LED lighting products
risks related to our multi-year warranty periods for LED lighting products;
risks associated with acquisitions, divestitures, joint ventures or investments generally; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products;
risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10 - K for the fiscal year ended June 25, 2017, and subsequent reports filed with the SEC.
«
Risk sentiment started improving
as the world economy recovered from the crisis and
volatility came down notably across asset classes,» the Citi analysts wrote.
We also do not rule out short - lived
volatility spikes on
risks such
as further U.S. political turmoil.
As a result, it is now clear that the U.S. is in the latter stages of the multi-year credit cycle, a period when rising corporate leverage negatively affects returns to corporate debt as investors demand higher risk premiums to compensate for the greater volatility created by increased leverag
As a result, it is now clear that the U.S. is in the latter stages of the multi-year credit cycle, a period when rising corporate leverage negatively affects returns to corporate debt
as investors demand higher risk premiums to compensate for the greater volatility created by increased leverag
as investors demand higher
risk premiums to compensate for the greater
volatility created by increased leverage.
Various considerations offer caution about getting too short, including the potential resurgence of
risk asset
volatility as market yields rise and / or
as Washington events evolve — ranging from the Mueller investigation to trade tariffs.
For example, the largest U.S. pension, California Public Employees» Retirement System, is considering more than doubling its bond allocation to reduce
risk and
volatility as the bull market in stocks approaches nine years.
They definitely have higher
volatility, but I still view them
as low -
risk.
The regulator called the financial product «an extremely high -
risk, speculative investment,» citing concerns about price
volatility, leverage, charges, and funding costs
as well
as price transparency.
Beta is a measure of the
volatility, or systematic
risk, of a security or a portfolio, in comparison to the market
as a whole.
An investment in these strategies is subject to various
risks, such
as those market
risks common to entities investing in all types of securities, including market
volatility.
In times of
volatility, uncertainty, and elevated geopolitical
risks, U.S. Treasuries and the dollar continue to be viewed
as safe haven assets.
Although bonds generally present less short - term
risk and
volatility than stocks, bonds do contain interest rate
risk (
as interest rates rise, bond prices usually fall, and vice versa) and the
risk of default, or the
risk that an issuer will be unable to make income or principal payments.
As a result of higher exchange rate
volatility, both during the crisis and subsequently, market participants and policymakers became keenly aware of the need for better exchange rate
risk management.
When SPY's 20 - day realized
volatility is above 20 %, the tail
risks of overnight returns are about the same
as those of close - to - close returns.
There were some studies going around that said holding
volatility as an asset class alongside a diversified portfolio could improve the portfolio's
risk characteristics.
Stock
volatility is back in earnest today,
as the
risk - off shift that was already apparent in forex markets throughout the equity - bounce reached the last stand for...
There are many studies about
risks in forex market such
as volatility risk and leverage
risks.
We did get a couple days of
volatility as there was some geopolitical
risk coming into the market around some headlines in North Korea, but generally the market's been pretty placid.
ETPs that target a small universe of securities, such
as a specific region or market sector, are generally subject to greater market
volatility,
as well
as to the specific
risks associated with that sector, region, or other focus.
Investing outside the United States involves
risks, such
as currency fluctuations, periods of illiquidity and price
volatility,
as more fully described in the prospectus.
We see
volatility and dispersion rising to normalized levels
as the Fed lifts rates and markets pay more attention to lurking tail
risks.
As we enter another year of
volatility and a strong dollar, we explore a new way to hedge for currency
risk in your international investments.
As investors allocate money among different assets, they face a complex question: What sort of expected returns are you looking for, and what sort of
risk and
volatility are you willing to accept in the pursuit of that performance?
Of course, the Fed's very recent caution has been warranted, given the first quarter's market
volatility and economic weakness
as well the ongoing
risks to global financial stability, particularly out of China.
Indeed, once our estimated market return /
risk profile is strictly negative (
as it is at present), the negative implications for the S&P 500 aren't affected by the position of the market relative to that average, except that the market tends to experience higher
volatility once the market breaks that average.
Wilson notes that part of the
risk at this stage of the rally is whether tax reform is already baked into the price of equities,
as well
as a likely increase in
volatility ahead and dispersion of earnings estimates.
We see the overall environment
as positive for
risk assets, but expect more muted returns and higher
volatility than in 2017.
As you move up the
risk ladder you take on greater price
volatility in exchange for potentially higher long - term returns.
In this environment of increased uncertainty, I predict that minimum
volatility strategies will re-enter the spotlight
as a way for investors to maintain equity exposure while seeking less
risk.
You might consider a global bond fund that hedges currency
risk and decreases
volatility, such
as the PIMCO Global Bond USD - Hedged (PAIIX) and the $ 5 billion Vanguard Total International Bond (VTIBX).
This would help mitigate the
risks associated with what is widely perceived
as a «liquidity illusion».10 The transition to such a market environment, however, could be accompanied by strained market conditions,
as suggested by recent episodes of elevated bond market
volatility.
Returns may be more muted this year,
as volatility bounces from a 2017 trough and potential
risks lurk.
In their October 2009 paper entitled «
Risk Sentiment Index (RSI) and Market Anomalies», Guy Kaplanski and Haim Levy introduce the Risk Sentiment Index (RSI) as a measure of the residual risk contained in VIX after accounting for the statistical and economic variables most predictive of future stock market volatility (such as previous month actual volatility and V
Risk Sentiment Index (RSI) and Market Anomalies», Guy Kaplanski and Haim Levy introduce the
Risk Sentiment Index (RSI) as a measure of the residual risk contained in VIX after accounting for the statistical and economic variables most predictive of future stock market volatility (such as previous month actual volatility and V
Risk Sentiment Index (RSI)
as a measure of the residual
risk contained in VIX after accounting for the statistical and economic variables most predictive of future stock market volatility (such as previous month actual volatility and V
risk contained in VIX after accounting for the statistical and economic variables most predictive of future stock market
volatility (such
as previous month actual
volatility and VIX).
And when valuations are at extremes,
as we believe bonds are today, historical price
volatility might not shed much light on future
risk.
While some investors view monetary policymakers» aversion toward market jitters (preference to maintain an «anti-wolf» policy)
as bullish
risk and argued for continued bearishness toward
volatility, the experience in Yellowstone would serve
as a counter-argument that prolonged «
risk suppression» would only breed complacency.
Furthermore,
as the extirpation of wolves exposed policymakers to previously unanticipated macro
risks, the suppression of known market
volatility via term premium dampening also implies the next wave of
risk contagion will likely come from unconventional sources beyond the current regulatory focus (similar to the lack of «dot - com euphoria» led some investors to see that there was no market excess prior to the GFC), and a «well sheltered» financial market would be ill - prepared to adapt.
Investors typically own short - term bond funds
as a low -
risk vehicle to preserve their principal, so losses in this segment tend to be more upsetting than a downturn in investments such
as stock funds where
volatility can be expected.
We have a saying that «when the CBOE
Volatility Index1 (VIX Index) is low it's time to go» — the VIX is often referred to
as the fear index or fear gauge, and when it's at low levels, we think it could be a prudent time to move a little more out of
risk assets.
In their November 2017 paper entitled «Tail
Risk Mitigation with Managed
Volatility Strategies», Anna Dreyer and Stefan Hubrich examine usefulness of managing volatility in this way as applied to the S&P 500 Index over a long sample period and across a range of performance mea
Volatility Strategies», Anna Dreyer and Stefan Hubrich examine usefulness of managing
volatility in this way as applied to the S&P 500 Index over a long sample period and across a range of performance mea
volatility in this way
as applied to the S&P 500 Index over a long sample period and across a range of performance measurements.
I then calculated the
risk - adjusted returns (calculated
as the returns divided by the historical
volatility) for each Dividend Champion over the past 63, 126, and 252 trading days.
In his October 2015 paper entitled «Trend - Following,
Risk - Parity and the Influence of Correlations», Nick Baltas compares performances of inverse volatility weighting and risk parity weighting as adapted to a long - short trend following strat
Risk - Parity and the Influence of Correlations», Nick Baltas compares performances of inverse
volatility weighting and
risk parity weighting as adapted to a long - short trend following strat
risk parity weighting
as adapted to a long - short trend following strategy.
Does the U.S. stock market
volatility risk premium (VRP), measured
as the difference between the
volatility implied by stock index option prices recent actual index
volatility, usefully predict stock market returns?