I don't have a strong grasp of implied volatility. Can you help with this question? Between $EVZ and $VIX, Europe seems more investable. Am I reading this correctly? Thanks.
When I look up $EVZ, it looks like a euro currency volatility measure. The VIX measures annualized implied volatility on the S&P 500, so they're two very different measures of vol. I wouldn't necessarily make an investment decision on based on measures of implied volatility alone. Those measures are simply measuring expected price swings on an underlying index, currency, etc.
But implied vol measures are useful for tracking fear and signs of capitulation. When VIX spikes like it has these past few days, that can signal panic. So it's useful to watch VIX alongside other sentiment measures. VIX is also useful for understanding how vol-targeting fund flows could behave (which is something I've review in recent videos).
I can unpack VIX further in this week's video update!
I don't have a strong grasp of implied volatility. Can you help with this question? Between $EVZ and $VIX, Europe seems more investable. Am I reading this correctly? Thanks.
Hey Will!
When I look up $EVZ, it looks like a euro currency volatility measure. The VIX measures annualized implied volatility on the S&P 500, so they're two very different measures of vol. I wouldn't necessarily make an investment decision on based on measures of implied volatility alone. Those measures are simply measuring expected price swings on an underlying index, currency, etc.
But implied vol measures are useful for tracking fear and signs of capitulation. When VIX spikes like it has these past few days, that can signal panic. So it's useful to watch VIX alongside other sentiment measures. VIX is also useful for understanding how vol-targeting fund flows could behave (which is something I've review in recent videos).
I can unpack VIX further in this week's video update!