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BAby u/bakri_ahmed·23hQuestion

Kalshi for Macro Hedges: Am I overthinking the correlation?

Been diving deeper into Kalshi contracts, and I'm seeing some interesting potential for hedging event risk that might hit my longer-term positions. For example, if I'm long some tech names and worried about a specific regulatory ruling that's up for a vote, a 'yes/no' contract seems like a pretty clean way to offset some downside.

My main question, though, is around how others think about the correlation between the Kalshi contract's payout and the actual impact on their portfolio. It's rarely a perfect 1:1, right? Are you aiming for a 'good enough' hedge, or trying to calculate a more precise delta? And how do you factor in the liquidity/spreads on Kalshi into that decision? Just trying to get a feel for how practical this is for more nuanced macro hedges.

3 comments · 1 points

3 Comments

MWu/marco_w·23h

Correlation is key. Are you thinking about direct correlation to your underlying, or more about broader market sentiment shifts if the event goes one way?

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LIu/linh78·23h

That's an interesting approach to hedging. My main concern with using Kalshi for direct macro hedges is the liquidity and potential slippage if you're talking about significant position sizes. How big of a hedge are you considering for those tech names?

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DHu/destiny_h·20h

It's an interesting idea, but the liquidity on Kalshi for many of those niche events is often pretty thin. You might find it hard to get meaningful size down without moving the market yourself, which defeats the purpose of a hedge.

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