Kathryn Kaminski analyzes past drawdowns in the S&P 500 and highlights that trend following tends to struggle at the onset of new trends and it tends to thrive in their extension. She says the key question going forward is whether this current crisis is going to extend or whether this is simply a short and sharp reversal that will correct quickly.
Trade War Crisis or Correction: Managed Futures and Crisis Alpha in 2025
AlphaSimplex
Kathryn Kaminski
Research
7 Pages
Key Takeaways
Systemic risk remains contained: Despite market volatility, indicators such as credit spreads and liquidity measures do not point to a systemic financial crisis.
Market correction indicators prevalent: The patterns observed align more closely with historical market corrections rather than crises.
Investor caution advised: While a crisis is unlikely, maintaining diversified portfolios and monitoring economic indicators is prudent.
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