Is risk predictable?

clock • 3 min read

Neil Michael, executive director of investment strategies at London & Capital, explains the tools that can be used to predict volatility and de-risk portfolios.

Market volatility either fills us with excitement or makes us want to run for the hills; one person's meat is another person's poison. But what is it? Volatility is essentially the degree to which markets swing around, particularly on the downside. One common measure of volatility is the VIX volatility or ‘fear' index, which measures the degree of uncertainty about the S&P500 index, based on options prices. We can see from chart 1 that the index is similar to a heart monitor, with big spikes in the index being associated with economic heart attacks, like the collapse of Lehman Brother...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

FCA proposes 'targeted and proportionate' changes to listing rules for closed-ended funds

FCA proposes 'targeted and proportionate' changes to listing rules for closed-ended funds

Consultation runs into August

Michael Nelson
clock 26 June 2026 • 5 min read
Big games, big names… and smaller companies

Big games, big names… and smaller companies

'Brazil should be looking to the future rather than to the past'

Gabriel Sacks
clock 22 June 2026 • 4 min read
Why should investors back China in the worldwide robotics race?

Why should investors back China in the worldwide robotics race?

The race to identify Asia's hidden gems

Xin-Yao Ng
clock 19 June 2026 • 5 min read