Minimizing Investors’ Risks With Sigma Global Management Long-Short Volatility Strategy

Key advantages of the long-short strategy that generates positive returns to investors even at times of market crisis.

Minimizing Investors’ Risks With Sigma Global Management Long-Short Volatility Strategy

Alarmed by high volatility marks, and not knowing the timing of the next big downturn, investors fear for their stocks losing value and start investing in cryptocurrencies, gold, or real estate, although the efficiency of these assets in securing capital in times of crisis is highly questionable. Investors do not realize that their stocks can still meet their goals on investment returns even in the declining and volatile stock market. With Sigma Global Management’s Market Neutral, Long-Short Volatility-Based Strategy investors do not have to be afraid of suffering losses from market decline and volatility.

Every investor is familiar with the Volatility Index (VIX) that indicates the market's expectations for the relative strength of short-term price changes. Just recently, at the end of November 2021, VIX jumped eight points as stocks declined reflecting investors' concerns over the potential impact of the newly emerged omicron covid-19 variant on their investments. This behavior pattern follows the well-known mantras investors learn regarding the VIX: "When the VIX is high, it's time to buy. When the VIX is low, look out below."

Investors should keep in mind that VIX’s pattern is always a descending one. Thus, VXX an Exchanged Traded Note (ETN) tracking the S&P500 VIX short-term futures, has indicated a 60% decline in returns from VIX-indexed funds over the last twelve months. The only exception to the negative return trend occurred at the time of rapid volatility spikes along the path that eventually returned to a downhill pattern. Therefore, investors have maintained negative returns on their stocks throughout the whole designated investment period.

With Sigma Global Management Long-Short Volatility Strategy investors will have the advantages of:

  • Protection from negative returns and not having to rely on VIX to learn if it is time to buy stock or sell it.
  • Receiving positive returns on their stocks throughout the whole investment period through buying and selling stock pairs simultaneously.

The core of our strategy is also based on volatility; however, it rests on two major premises that set our strategy apart from the crowd, namely:

  • Forming long-short stock pairs seeking to return to their mean value.
  • Selling the stocks that have been gaining considerable value for some time and buying the stocks that have been losing significant value for some time.

The only two major prerequisites that must be considered are:

  • Both simultaneously diverging securities must have a stable VAR at the same time.
  • One security should be positioned in the upper border of the VAR tag quantile, and the other in the lower border of the VAR tag quantile.

This clear and viable strategy can generate the most shock-resistant, steady returns in any market condition. There is no space left for fearing volatility shocks and declining interest rates. You are welcome to start generating steady and positive returns with Sigma Global Management’s Long-Short Volatility Strategy at any time!

Stay tuned with us and learn from our Chief Investment Officer exactly how our Long- Short Volatility Strategy makes investors safe from crisis and provides positive returns even in times of market decline coming up in our next podcast release.

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