Stock-bond correlation is a critical factor in portfolio diversification, influencing how different asset classes interact during market movements. The correlation between stocks and bonds helps investors understand the degree to which these two assets move in relation to each other. In the years of 2010s, stocks and bonds have had …

Stock momentum refers to the tendency of assets that have been performing well to continue outperforming others over a certain period. This phenomenon is rooted in the belief that existing trends are likely to persist. A reversal occurs when the direction of a price trend shifts, transitioning from an upward …

The weekend (or Monday) effect in the stock market refers to the phenomenon where stock returns exhibit different patterns on Mondays compared to the rest of the week. Historically, there has been a tendency for stock prices to be lower on Mondays. Various theories attempt to explain the weekend effect, …

Realized volatility (RV) is a measure that captures the degree of price fluctuation in a financial instrument over a specific period. This metric is valuable for investors and traders as it reflects the true price action experienced by an asset, aiding in risk assessment and strategy development. Realized volatility contrasts …

Dividend yield is a financial metric that provides insight into the income generated by an investment in the form of dividends, relative to its market price. Expressed as a percentage, the dividend yield is calculated by dividing the annual dividend per share by the current market price per share. This …

Beta is a financial metric that measures the sensitivity of a stock’s returns in relation to the overall market. It provides insights into how much a stock tends to move in response to market fluctuations. A beta of 1 indicates the stock generally moves in line with the market, while …

The VIX, commonly known as the “fear gauge,” is a model-free index that serves as a reflection of market volatility expectations for the upcoming 30 days. Essentially, it represents the price of a basket of short-maturity options. The VIX is calculated from the S&P 500 index options’ prices, offering a …

Dispersion trading is an options trading strategy that capitalizes on the spread or difference in implied volatility between index options and individual stock options. The basic premise involves selling index options while simultaneously buying options on individual components of the index. Traders expect that the implied volatility of individual stocks …

Various prediction methods are employed in the stock market, leveraging diverse techniques and data sources. Fundamental analysis delves into a company’s financial health, examining factors like earnings, assets, and management. Machine learning and artificial intelligence have gained prominence recently, using algorithms to analyze vast datasets and identify patterns elusive to …

Delta hedging is a risk management strategy widely used in financial markets, particularly in options trading. The primary objective of delta hedging is to offset or neutralize the directional risk, or delta exposure, associated with an options position. Delta represents the sensitivity of an option’s price to changes in the …