In today’s market environment, volatility is an increasingly important asset class. The benefits of volatility futures contracts are numerous:
- Volatility futures as a sector or asset class may increase a portfolio’s diversification or hedging opportunities.
- It tends to be negatively correlated to stock indexes.
- With contracts like VSTOXX® Futures, which are EUR-denominated volatility futures, an investor with EUR- denominated equity exposure does not have currency risk and exposure. Further, with increased volatility in the Eurozone, VSTOXX® Futures are a targeted way to gain exposure to Europe.