Ai For Alpha, a leader in AI-driven fintech solutions, has introduced its latest innovation: the “Risk Off” CTA strategy. This new strategy utilizes Ai for Alpha’s proprietary Decoding technology to create replication portfolios that dynamically adjust allocation to minimize exposure to risk assets, providing a more defensive investment approach.
- Decoding Technology: Ai For Alpha’s advanced technology enables the creation of replication portfolios for traditional and alternative investment strategies, including CTAs, Global Macro, and hedge funds.
- “Risk Off” CTA Strategy: Designed to replicate CTA managers’ benchmarks while adjusting allocations to favor safer assets, thus reducing exposure to risk-on assets.
Context and Innovation:
- Market Challenges: Rising inflation and unstable correlations between equities and bonds have challenged traditional CTA strategies. Ai For Alpha’s “Risk Off” CTA strategy addresses these issues by focusing on safer, trend-following assets.
- Risk-Off Filter: The strategy incorporates a risk-off filter using a non-linear hysteresis algorithm to classify assets into risk-on and risk-off categories based on their correlation to global equity indices.
Quotes from Leadership:
- Béatrice Guez, CEO of Ai For Alpha: “The ‘Risk Off’ CTA strategy leverages our expertise in AI-powered investment replication to offer a more defensive allocation, enhancing portfolio protection during market downturns.”
- Thomas Jacquot, Chief Revenue Officer: “This strategy acts as a proxy hedge, providing improved risk management with a notable reduction in correlation to equity markets.”
Performance Highlights:
- Reduced Equity Correlation: -35% correlation to US Equities.
- Asymmetric Returns: Offers a more reliable hedge against equity market corrections with improved performance during downturns.
- Strong Downturn Performance: Average monthly performance improves significantly during severe market declines, with a 3.7% return when US Equities drop by more than 6%.
Performance Statistics (Dec 2004 – Sept 2024):
- Annual Total Return: 8.1%
- Volatility: 9.1%
- Max Drawdown: 15.7%
- Sharpe Ratio: 0.65
- Return/Max Drawdown Ratio: 0.51
Ai For Alpha’s “Risk Off” CTA strategy represents a significant advancement in defensive investing, providing a robust alternative to traditional CTA strategies and enhancing risk management in uncertain market conditions.
