Alquant Alvola is a smart hedging strategy that offers uncorrelated returns to the stock market. It dynamically targets a long volatility exposure during market turbulences and a short volatility exposure during calm market periods. The objective is to outperform during periods of significant market stress, while also targeting positive absolute returns during bull markets, thus helping to successfully position your equity portfolio in all market phases.
Alvola targets an overall negative correlation to the equity market while delivering substantial positive returns.
In times of crisis, Alvola seeks to deliver substantial returns and act like an airbag for equities.
Alvola aims to reduce the usual bleeding of hedging strategies during rising markets.
Blinded by the illusion of diversification and the search for yield, investors too often neglect the impact that an asset with a low or negative correlation can have on their asset allocation and are therefore reluctant to include new alternative assets in their portfolio. Alvola is an example of such an asset with high diversification potential. Its approach offers a profitable anti-correlation to equity growth and a low correlation to bonds.
The high market valuations and the duration of the current bull market are the seeds of upcoming drawdowns, which pose a significant risk to investors given the gains required to overcome a drawdown. A 50% drawdown, as seen during the financial crisis, requires a 100% gain to return the previous peak. Therefore, it is crucial to effectively protect your portfolio against drawdowns in order to reduce the time it takes to recover from losses and increase long-term performance.
Alvola can be added to any equity-like portfolio and is designed to act as an airbag for your portfolio in times of significant market stress. Over the long term, adding 10% Alvola to your equity portfolio will increase your returns by 2% per year and reduce volatility. With the use case on the Alquant platform, you can learn more about the impact of adding Alvola to different stock indices and analyse different scenarios in the past with different allocations to Alvola to better understand what to expect in the future.