Monitoring Systemic Risk Index

The systemic risk index plays a crucial role in understanding market behavior during periods of volatility. Recently, despite considerable spikes in market uncertainty, this index remained relatively low, highlighting that the rise in volatility may not be indicative of sustained systemic risk. Historically, major market drawdowns have been accompanied by significant shifts in systemic risk, making the current episode noteworthy due to its episodic nature. Observing how this index behaves over the coming weeks could provide valuable insights into whether a defensive investment approach is warranted.