Vix-to-realized Volatility Contraction Signals Mean Reversion Opportunity In Large Caps

Quant thesis: When VIX futures curve inverts (short-term > long-term) while 20-day realized vol on SPY is <50% of VIX level, market is overpricing tail risk; mean reversion long bias. Volatility contraction and fear premium collapse drive equity risk appetite rotation into growth and technology.

Plain English: When VIX futures curve inverts (short-term > long-term) while 20-day realized vol on SPY is <50% of VIX level, market is overpricing tail risk; mean reversion long bias. Volatility contraction and fear premium collapse drive equity risk appetite rotation into growth and technology.

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Type
alternative
Family
Attention & Sentiment
Status
Sandbox
Frequency
daily

Quant thesis

When VIX futures curve inverts (short-term > long-term) while 20-day realized vol on SPY is <50% of VIX level, market is overpricing tail risk; mean reversion long bias. Volatility contraction and fear premium collapse drive equity risk appetite rotation into growth and technology.

Plain English description

When VIX futures curve inverts (short-term > long-term) while 20-day realized vol on SPY is <50% of VIX level, market is overpricing tail risk; mean reversion long bias. Volatility contraction and fear premium collapse drive equity risk appetite rotation into growth and technology.

What you are looking at

When VIX futures curve inverts (short-term > long-term) while 20-day realized vol on SPY is <50% of VIX level, market is overpricing tail risk; mean reversion long bias. Volatility contraction and fear premium collapse drive equity risk appetite rotation into growth and technology.

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Data sources

Known risks

Data source instability, false positives, and regime shifts.