Markets, by their nature, oscillate between periods of calm and turbulence. The systematic investor does not attempt to predict these cycles—rather, they construct frameworks resilient to both.
Our approach centers on identifying persistent patterns within the noise. While short-term price movements may appear random, longer-horizon relationships often exhibit exploitable structure.
The Role of Variance
Elevated volatility is not merely risk—it is information. The dispersion of outcomes reveals market participants' collective uncertainty, and within that uncertainty lies opportunity for the prepared.
Adapting Position Sizes
When volatility expands, position sizes must contract. This is not a retreat—it is a recalibration. The goal is to maintain consistent risk exposure regardless of market conditions. A 2% move in calm markets carries different implications than a 2% move during a crisis.
Volatility Regimes
Markets tend to cluster in volatility regimes. Low volatility begets low volatility—until it doesn't. High volatility persists—until it fades. Understanding these regime dynamics allows systematic strategies to adapt their behavior accordingly, rather than applying a one-size-fits-all approach.
The systematic investor embraces volatility not as an enemy to be avoided, but as a feature of markets to be understood and navigated.
Disclaimer: This content is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Please review our full disclaimers.