One of the biggest advantages of ETFs over their mutual fund counterparts is their abundant liquidity; they can be traded intraday just like any other stock, opening weekly the world to active traders seeking to cash in on the most opportunities offered through the exchange traded world. In fact, there are numerous products that are designed specifically for traders to use on a daily basis, as they offer exposure to volatile sectors that tend to exhibit large movements on an intraday basis.
One popular option for trading comes in the form of volatility products; funds that track the VIX CBOE Volatility Index tend to experience large movements on a daily basis.
The volatility index is not volatile tangible benchmark or asset that someone can point to or observe, it is more of a hypothetical benchmark designed to reflect the volatility exhibited in markets for any given day.
While it certainly offers traders lucrative opportunities, it can often be very difficult to predict and is notorious for leaving investors with their heads scratching given its erratic performance. Equities Poised To Pop ]. Using Day Volatility as an example, this metric first finds all of most closing prices for an asset over weekly trailing day period.
Afterwards, it squares this difference to get a result which is known as the variance with standard deviation. To give you a better idea of how this is options applied, SPYwhat many would consider to be the benchmark for equity funds, is currently exhibiting stocks day volatility of Due most a process known as heteroskedasticity, investors need to monitor volatility often.
As much fun as it is to say, heteroskedasticity simply means that the standard deviations of a given security will not be constant over time, meaning that an ETF that presents high volatility now, may be relatively stable in a few months time [see also Three Intriguing Alternatives To Popular ETFs SPY, XLF, FXI ]. In the current environment, one could argue that any investment would be volatile, but looking at a longer term metric like the 50 or volatility average will give investors a good idea of which products remain volatile despite what the short-term environment is with.
Also, investors can now use our enhanced charting capabilities to help find the best option available for their objectives. Below, we outline four ETFs that offer high volatility and likewise track a real asset or market to allow investors to make a more comfortable allocation in their daily trades:.
This ETN is a popular commodity option that grants exposure to cotton futures contracts. Five Commodity ETFs in Backwardation ].
EWQ offers exposure to the French equity marketand is something of a dinosaur in ETF terms, as it has been around since Despite its age, this fund remains very popular as it trades an average of approximatelyshares a day [see EWQ Technicals ].
The fund features major companies like Total SA and BNP Paribas in its top holdings, as it focuses primarily on the large cap sector of the French economy. Traders may be surprised to learn that this large cup fund is relatively volatile, and it currently exhibits a 20 day volatility of Another soft commodity product making the list, SGG seeks to invest in futures contracts for sugar.
SGG has a current 20 day volatility of about This iShares product is among the most popular options for gaining exposure to silver, as SLV is designed to track physical silver bullion as opposed to the futures-based methods that many commodity products apply.
Silver is often seen as somewhat of a safe haven next to volatile, as many will flee equities on rough days and buy up this precious metal. But on bull market runs, many tend to sell off the metal for better greener pastures, which is what makes this options incredibly volatile [see Lessons From The Leveraged Silver ETF ]. ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
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All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer. REETOptionsSPY. Low Volatility ETFs invest in securities with low volatility characteristics. These funds with to have relatively stable share prices, and higher than weekly yields.
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