Hedging funds change the trading strategy to adapt to the market fluctuations

The hedge funds have gradually changed from the strategy of ‘contrasting indicators’ (ie bet that the stocks move within one index other than each other) that were popular last year, to more accurate and focused strategies. With the disturbances of customs duties that confused global markets, the total economic problems dominated the scene and bypassed the news of individual companies. In April, the average link between the moves of the S&P 500 index reached its highest level in more than two years, and it remained high, even during the period of announcing their financial results. Europe was a similar trend. The relationship between association usually affects the revenue of ‘contrast’ strategies, which bet on the different volatility of individual stocks compared to the general index, but this did not happen this time. Professional investors used smaller and more selective baskets instead of relying on large indicators, which helped them achieve profits from this strategy. “Despite the last leap in the link, the controls have been profitable over the past few months, as baskets focused on shares that have seen higher volatility,” said Micheloono -Vizcaya Argentaria SA. He added that traders in Europe who apply the full-Arb migrants have gained profits over the past few weeks by liquidating their positions in shares that achieved the highest real volatility, with a decline in vast volatility. The profitability of the width of the difference shows data collected by “Bloomberg” that a virtual basket monitored the fluctuations of selected Swiss financial enterprises compared to the Swiss market index, recorded a real difference during April, which means that traders who adopted this strategy were at a profitable field. Although the implicit association of the S&B 500 index decreased its peak over a three -month period earlier in April, the monthly average was almost twice the average annual year. The quantitative investment strategies, some of which depend on contrast extraction, have recently been very active in stock markets, and the variation models achieved “Premiab” CEO Adrian Gilio, ‘very strong performance’, which specializes in the detection of quantum investment strategies. Defense contrast strategies were popular even before April 2, but it became more important in the current volatile environment. To keep abreast of this situation, JP Morgan Chase strategies have recommended techniques to deal with binding shocks, such as implementing partial hedging during the day on the part associated with the sale of low -oxcillation index, or supporting investment centers by using options on the “vix” or “VSTox” indicators to move from sudden benefits in fluctuations. Strategies at Bank of America have indicated on their part that the customs threat for the global economy is “made with human hands and can be withdrawn”, and therefore the serious risks remain on the left of the income curve unless an external shock occurs. Last week, they recommended a brave preparation for the contrast strategy, with the adoption of a trend to centers focusing on the sale of fluctuation. The impact of customs duties appears to be the abundance of volatile sales strategies (betting of decline), so far the customs domain disorders have survived without significant damage. Some multi -strategy funds utilized the situation in early April, when the fluctuations were great, to enter into the ‘interest trading’ offerings or sell fluctuations. According to Cegalio, some of the boxes that passed in the timing of the entry achieved yields of two Khanat within a few days, with the collapse of fluctuation levels later. However, the recent decline in fluctuations is an indication of the environmental change, and the interest trading is now more concentrated by options with a fixed implementation price, according to Antoine Burchere, the head of the structural products of the UK, Europe, the Middle East and Africa at City Group. “The sale of volatility has increased at a limited risk,” Breast Hyrier said. He added that the market makers are less exposed to changes to volatility, so “In cases of landing we can see less volatility as the situation before Corona, or that any leap in the volatility is short -term.”