Risk Adjusted Returns Come Early In Bull MarketsFebruary 05, 2014
While most are familiar with the concepts of risk and return, very often investors overlook the risk component when looking at stock returns. For instance, when considering equity returns, it would be very easy to make the statement that the S&P 500 at 1750 is up 400 points (or roughly 30%) from its March 2011 levels of 1300. While true, it is a statement that doesn’t consider risk. The best proxy for equity risk is the CBOE Equity Volatility Index (VIX), which captures the implied volatility of the stocks comprising the S&P 500.