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On correlation and hedging strategies
Still trying to wrap my head around effective hedging. When you're managing a portfolio with several correlated assets, say $SPX and some tech majors, how do you guys approach hedging? Do you look for genuinely uncorrelated assets, or is there a smarter way to offset risk without completely diluting potential gains by just adding more inverse ETFs?
1 comments · 1 points
For correlated assets like SPX and big tech, genuine uncorrelated assets are rare and often come with their own risks. You might be better off looking at options strategies (collars, covered puts) to define your risk, rather than chasing something completely orthogonal that might not even perform when you need it to.