Odd Price Disparity In VIX Hedges Due To Expected Volatility

As 20 percent of the ten most damaging stock market drops in history have occurred in the past month, investors who understand the need to hedge at the same time are benefited from having proper expectations for various scenarios. While various volatility measures such as the CBOE Volatility Index® (VIX® Index) negatively correlate to the stock market 70 to 80 percent of the time, with the VIX typically rising in value at a generally consistent ratio percentage, during periods of anticipated market volatility investors might expect different results.

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Such could be behind the recent odd swings in correlation ratios, volatility experts tell ValueWalk. On August 21, 2015, when the stock market lost 3.19 percent of its value on the S&P...