Is risk predictable?

clock • 3 min read

Neil Michael, executive director of investment strategies at London & Capital, explains the tools that can be used to predict volatility and de-risk portfolios.

Market volatility either fills us with excitement or makes us want to run for the hills; one person's meat is another person's poison. But what is it? Volatility is essentially the degree to which markets swing around, particularly on the downside. One common measure of volatility is the VIX volatility or ‘fear' index, which measures the degree of uncertainty about the S&P500 index, based on options prices. We can see from chart 1 that the index is similar to a heart monitor, with big spikes in the index being associated with economic heart attacks, like the collapse of Lehman Brother...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

PA360: It is 'impossible' to pick out the best asset class every year

PA360: It is 'impossible' to pick out the best asset class every year

‘The outsourced route is one that a lot of advisers are now taking’

Hope Coumbe
clock 26 April 2024 • 2 min read
PA360: Framing of information to investors 'extremely pervasive'

PA360: Framing of information to investors 'extremely pervasive'

Consumer Duty states consumer biases must not be exploited

Jenna Brown
clock 25 April 2024 • 1 min read
Schroders chief executive Peter Harrison to retire in 2025

Schroders chief executive Peter Harrison to retire in 2025

Harrison began his career at Schroders as a graduate in 1988

Cristian Angeloni
clock 24 April 2024 • 2 min read