Mastering Stock Beta and Underlying Asset Correlations
When you start to trade more often and with more positions, remaining as neutral as possible will help smooth out your returns over time. This doesn't mean that you can't get directional (betting on a move up or down in something) but it does mean that you have to know how to re-balance your portfolio.
We've shown before that using SPY beta weighting is a great start and in today's show we'll continue that discussion with additional underlying asset correlations. Know how these work will help if you ever start building targeted strategies in a particular sector/industry - like Oil, Technology, Social Media, etc.
In Today's Show, You'll Learn About:
- Quick review of what Beta is and how it really works for stock trading.
- How a Beta weighted portfolio helps you make smarter decisions with new trades.
- Why Beta can sometimes help you NOT make a bad trade.
- Underlying asset correlations and hedging with asset pairs (Oil and Social Media).
- Why there is a "Delta Neutral Fantasy" out there and how to avoid it.
- Scanning for an IWM beta weighted trade to neutralize our other index positions.