The Role of Volatility in Asset Management

There's no day one anymore. There is a continuous monitoring of a signal, which becomes larger or smaller and at times change direction. And we typically utilize that signal to dynamically increase or reduce the gross exposure we have in an asset. So this dynamic sizing from a signal perspective is about making my bets more extreme when the signals are stronger. In addition to that, there is management angle, which says I'm going to vol scale my exposures dynamically, not just at the initiation. That's purely a volatility targeting adjustment to make the overall portfolio hit some sort of vol.

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