Frequently Asked Questions

A volatility index is a financial metric that measures the market's expectation of future volatility. It reflects investors' sentiments about future price fluctuations and can indicate the level of risk in the market. There are several methods to gauge market volatility including the most basic one, that is, the standard deviation of the historic prices. More advanced methods include GARCH and those based on the prices of options. The most well-known volatility index is the VIX, popularly known as the "fear gauge" of the market tracks the implied volatility of S&P 500 options. High values indicate increased uncertainty and potential market declines, while lower values suggest a more stable market environment. 

Investors can leverage volatility indices in several ways:

1. Risk Assessment: Monitor volatility indices to gauge market sentiment and overall risk levels.

2. Hedging Strategies: Utilize options on volatility indices, such as the VIX, to hedge against potential market downturns, balancing portfolios to protect against unexpected declines.

3. Derivative Pricing: Use volatility as a key input in derivative pricing models, essential for institutional investors.

4. Pure Volatility Trading: Engage in trading VIX-linked instruments, like futures and options, to capitalize on anticipated changes in market volatility.

5. Risk Premium Yield: Exploit the tendency of index options to price in more uncertainty than realized, allowing arbitrage opportunities between implied and realized volatility.

6. Term Structure Trading: Take advantage of the mean-reverting property of volatility indices to trade on term structures and potential calendar spreads based on perceived risk levels.

7. Exchange-Traded Products (ETPs): Investors invest in VIX-related ETFs and ETNs, such as ProShares VIX Short-Term Futures ETF (VIXY) and iPath Series B S&P 500 VIX Short-Term Futures ETN (VXXB), to gain exposure to volatility.

8. Market Entry-Exit Pivots: Analyze volatility spikes to identify optimal entry and exit points, allowing for effective positioning during market fluctuations.

9. Portfolio Management: Adjust allocations based on volatility trends to enhance risk-adjusted returns.

10. Risk Management: Implement risk management strategies by monitoring volatility indices to set stop-loss orders and optimize position sizing, ensuring better control over potential losses in volatile market conditions.

The FIX Index is a proprietary metric designed to measure market volatility and predict potential downturns. It analyzes market data to identify spikes in volatility that often precede significant market corrections, offering investors an early warning signal. By tracking fluctuations and trends, the FIX Index serves as a valuable tool for decision-making, helping to inform strategies for entering or exiting the market.  

While both the FIX Index and the VIX measure market volatility, the key difference lies in their predictive capabilities and methodologies.

VIX Methodology:
The VIX Index is derived from the prices of S&P 500 index options, specifically using the implied volatility of these options over 30 days. It reflects the market's expectations of future volatility based on the pricing of options, meaning that it typically reacts to changes in sentiment and actual market movements after they occur. As a result, the VIX usually tends to spike during and after market downturns, and not before the market declines based on the historic data analysis.

FIX Index Methodology:
In contrast, the FIX Index employs a more comprehensive mathematical framework that analyzes various market signals and patterns beyond just option pricing. Instead of taking just one time series, we take the data of the entire constituents of the index such as the 500 companies of the S&P-500 Index, and create complex financial networks with it, where the companies serve as the nodes and the economic links serve as the edges. By utilizing complex systems theory, the FIX Index is designed to capture shifts in market dynamics before they manifest in price movements. This allows the FIX Index to spike ahead of market downturns, providing early warnings of potential corrections, whereas the VIX typically lags behind, reacting only after the crash has begun.

In summary, while the VIX serves as a measure of current market sentiment, the FIX Index offers predictive insights that can help investors anticipate market movements, allowing for more proactive risk management and investment strategies.

Currently, we have 700+ distinct signals for major global indices such as S&P-500, NASDAQ, MSCI World Index, and so on distributed across the following main categories:

FIX Volatility Index® Provides signals of impending market volatility weeks to months in advance, helping us protect our long-term returns from sudden market drops. 

FIX Growth Index® Equally crucial, it confirms the bottom of a correction and indicates an impending rally, presenting an opportunity to enter the market at lower prices.

FIX Market Pulse® Provides an epoch for phase transitions and the directionality of the momentum.

FIX Market Baseline® It acts similarly to support and resistance levels but is derived from financial networks rather than traditional pivot levels.

FIX Cyclic Index® Meanwhile, the Cyclic Index identifies prevailing trends in the market influenced by various factors, including seasonality, economic cycles, and sector rotations. 

The FIX Index has been analyzed over various time periods, including recent data from 2022 to 2024, as well as a comprehensive historical dataset spanning all the way from the 1960s to 2024. Currently, we have data ready to release from 1990 spanning 34 years of historical period. This long-term perspective allows for an assessment of its predictive power across multiple market cycles and significant economic events. 

FIX is more than just timing the market by speculation. Investors can utilize the FIX Index to identify optimal entry and exit points in the market. However, it is not only about timing the market. By monitoring spikes in the FIX Index, investors can make informed decisions about rebalancing their portfolio by appropriately rotating across various asset classes such as equities, bonds, commodities, and sectors to exit before potential downturns and recognize when to re-enter following corrections. This strategic application can help enhance overall investment performance. 

Yes, the FIX Index can be beneficial for various types of investors, including retail, institutional, and active traders. Its insights into market volatility and potential corrections make it a valuable resource for anyone looking to navigate market fluctuations effectively. However, investors should consider their individual risk tolerance and investment objectives when using the index. 

The FIX Index is updated in real time, allowing investors to track market activity and fluctuations as they occur. This timely data ensures that users have access to the most current information for making informed investment decisions. 

The FIX Index is built on a robust mathematical framework rooted in complex systems theory, quantum and statistical mechanics, such as Random Matrix Theory (RMT), Gaussian Orthogonal Ensembles (GOE), Power Law, and Spectral methods such as Detrended Fluctuctuation Analysis (DFA) combined with mathematical microscopes such as Fourier and Wavelet transforms. It utilizes a quantitative approach that analyzes market data to detect patterns and phase transitions indicative of volatility. Unlike traditional models that may rely on AI or machine learning, the FIX Index employs pure mathematical modeling techniques that minimize biases and overfitting risks. This foundational approach allows for the accurate assessment of market dynamics based on the interplay of various factors, without being overly tailored to past data. 

No, our methodology is designed to minimize the risk of overfitting. Traditional models often overfit because they are built to adapt to specific datasets, leading to a form of deductive analysis. In contrast, we utilize an inductive reasoning approach that develops a conceptual framework based on the detailed study of phenomena within complex systems, such as stock market crashes. By first establishing a theoretical framework grounded in cause-and-effect analysis, we then apply it to data to test our theories and propositions. This approach ensures that the model evolves independently of the data, significantly reducing the likelihood of statistical overfitting. Our dataset can then be supplied to AI_ML algorithms for further refined estimates especially though the sophisticated Physics Informed Neural Network or PINN algorithms.  

The FIX indices have the potential to disrupt the investment industry by providing more accurate and timely insights into market volatility and potential corrections. By offering a predictive tool that anticipates market downturns and identifies recovery phases, the FIX indices empower investors to make better-informed decisions. This could lead to more strategic trading and investment approaches, potentially reducing losses during market corrections and enhancing overall portfolio performance. 

Our primary competition includes established volatility indices like the VIX and other proprietary market analysis tools. Additionally, financial analytics firms that offer similar services in risk assessment and predictive modeling also pose competition. However, the unique mathematical modeling approach of the FIX indices, which minimizes overfitting and relies on complex systems analysis, differentiates us from these competitors and positions us as a leader in innovative volatility measurement and market prediction.