Downside Risk: A Deeper Dive

One distinct advantage of following the CSI Ratio is the ability to predict and hedge downside risk.

A historical analysis indicates the the significant vartiation in percentage likelyhood of a 4% (or greater) dip in the S&P 500 within the next seven day period.


Specifically:


  1. When in quadrant 1 (Expansion), the S&P 500 is 51.5% LESS LIKELY to experience a 4% or greater sell off than across all quadrants.
  2. When in quadrant 2 (Consolidation), the S&P 500 is 12.3% LESS LIKELY to experience a 4% or greater sell off than across all quadrants.
  3. When in quadrant 3 (Contraction), the S&P 500 is 100% MORE LIKELY to experience a 4% or greater sell off than across all quadrants.
  4. When in quadrant 4 (Reflation), the S&P 500 is 50% MORE LIKELY to experience a 4% or greater sell off than across all quadrants.