Can Volatility Actually Help Protect Your Capital?


Key Ideas

  • Volatility is usually seen as something bad, as the enemy of long-term performance; but the insights it provides may actually make it more of a tool that can be used to help strengthen portfolio resilience.
  • Volatility’s historical relationship with market drawdowns may offer an effective rebalancing signal, and its greater persistency than past returns at the security level may help strengthen portfolio construction.
  • These insights can be applied through a dynamic adaptive strategy that may help reduce risk exposure in difficult equity markets while strengthening long-term return potential.