JohnKicklighter
Short

S&P 500 versus a Risk-Reward Measure

INDEX:SPX   S&P 500 Index
290 3 6
While my Risk-Reward Index is a little more global in perspective (an aggregate of G10 10-year government bond yields divided by FX volatility), this offers a similar evaluation of the market. The 10-year Treasury yield is a baseline for 'regular' returns in the market while the VIX             is a popular 'risk' measure. Combined, they see what level of return we should expect for the risk taken. Prices have diverged from this rudimentary fundamental valuation for years...
Killy_Mel
a year ago
Why dividing Vix by 10 year yield is a risk reward factor? care to elaborate?
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JohnKicklighter PRO Killy_Mel
a year ago
It's an imperfect means of establishing a big picture 'return' measure to one of 'risk' to evaluate broad sentiment (risk-reward). Returns are generally a premium to the baseline established in government bond rates or central bank benchmarks. The VIX is a favored 'fear' metric by many. So, it gives a general assessment.
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Killy_Mel JohnKicklighter
a year ago
i see

thing is VIX is derived from put option premiums on S&P500 futures, so my idea is that in this case you are dividing apples by oranges)
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