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Utilizing European volatility during the current market conditions
By Mark Shore, Shore Capital Management
Wednesday, July 16, 2014

The political uncertainty in some Eastern Europe countries caused volatility and stress in the European equity markets. This article examines the recent volatility in the EURO STOXX 50® Index and the corresponding price moves in the VSTOXX® volatility index. Could the VSTOXX® volatility index offer portfolio diversification during these moments of uncertainty? Does it offer a more efficient diversifier for European equity exposure than other volatility indices? This discussion includes two perspectives; the hedger (investor) and the trader.

Liquidity is always important to an investor or trader. Table 1 gives readers an overview of the developments in VSTOXX® Futures liquidity over the last years.

Since last September, the EURO STOXX 50® Index has trended higher. However, Read more....

Copyright ©2014 Mark Shore. Reprinted with permission. Contact Mark Shore for permission for republication at info@shorecapmgmt.com. Mark Shore has more than 25 years of experience in the futures markets and managed futures, publishes research, consults on alternative investments and conducts educational workshops. www.shorecapmgmt.com.

Mark Shore is also an Adjunct Professor at DePaul University's Kellstadt Graduate School of Business, where he teaches the only known accredited managed futures course in the country. He is also a Board Member of the Arditti Center for Risk Management at DePaul University.

Past performance is not necessarily indicative of future results. Only use appropriate risk capital; this investment is not for everyone. The opinions expressed are solely those of the author and are only for educational purposes. Please talk to your financial advisor before making any investment decisions.

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