Follow
@NBS So the principle is that technical analysis of more correlated assets gives a better signal/noise ratio?
One might say 7.5 being resistance for the 2018 top and support for the 2021 summer lows shows weight, if only for confluence with a trade in BTC/USD.
I'll check out the Russel 2000, thanks.
Similarly, the correlation between SPX and (anything) can be used to hedge the systemic risk of the economy in general. So if your assets are in BTC and you have SPX puts, the economy crashes, and so does BTC, you’re good.
However, SPX puts only hedge risks that are SPX-like. If blockchain is cracked, your SPX puts are relatively useless. Maybe SPX goes down a little.
@skells @NBS
What you want to do is very significant.
Example: heating oil commodity prices might correlate strongly with the price of jet fuel, so maybe an airline decides to use heating oil futures to hedge their jet fuel price risk, as they are relatively liquid.
Then, a cyberattack hits a major jet fuel production plant and jet fuel prices surge.
The hedge is useless because while the two are generally correlated, the situation that occurs affects only one of the two.