How stock and volatlity ETFs compare. S&P 500 (SPY) and VIX Short-Term Futures (VXX)

The Stock Market (S&P 500) has returned on average 1.4% per month and the Volatility ETF (VXX) has returned -4.6% per month. This data goes back to 2009. Where the returns have a -0.76 correlation.

Monthly Returns	SPY	VXX
count	154	154
mean	1.4%	-4.6%
std	4.1%	19.3%
min	-12.5%	-35.2%
25%	-0.6%	-15.6%
50%	1.9%	-8.6%
75%	3.7%	2.3%
max	12.7%	102.8%

The Monthly Return Distributions

SPY and VXX Monthly Returns - unpackinvesting.com
Takeaways

SPY and VXX are strongly negatively correlated with -0.76 since VXX inception
The monthly magnitude of returns is about -3x times with almost 5x times the volatility.
With the strong negative correlation and greater volatility VXX can make a great hedging vehicle for SPY or shorting VXX can be utilized as a more capital efficient exposure tool (leverage).
Further interesting research can include testing if VIX levels have any forecasting ability in SPY and VXX in returns or volatility

Comments

using options to recover from a big move against me when buy a stock for shareholder benefits - RCL attempt to repair position

Shareholder Benefits Owning shares of a company can entitle you to special benefits when consuming products or services. For example, Royal Caribbean Cruises (RCL) provides $100 onboard credit per Stateroom on Sailings of 6-13 nights. With an upcoming cruise booked and most of my portfolio in cash, I decided to take advantage of this offer. I've done a few cruises in the past and definitely enjoyed Royal Caribbean, especially having young children; and can imagine I will take more cruises with them in the future. The Purchase of Shares I didn't do any deep Fundamental or Technical Analysis, but looked at a 5 year chart seeing the stock priced at $135 before the COVID-19 pandemic, and during the pandemic reached a low of around $24. When I purchased the shares it was $40 and dropped in price for the 2 preceding days. Since I bought at the end of the day, I figured I would sell a call option (overwrite) the next day as the volatility was high around 85%....

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