Monday, June 27, 2016

Brexit Correlations

With the "Brexit" decision looming over markets last week we got a fresh reminder of just how tightly asset classes are correlated when the market receives an unexpected shock.  This was the case when Britain, to the surprise of most, voted to leave the European Union.  US government bonds, the dollar, Yen and precious metals all soared higher while global stocks, the Euro and oil got hit hard upon the outcome of the vote.

VIX Term Structure:

Since the start of this sideways, choppy market environment in late 2014 when the VIX term structure has gone above 1 that has been a short term buying opportunity.  Will this time be different??

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

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