The State of Realized Volatility: What took place in 2022 and what's in store for 2023

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Market volatility found itself at the center of 2022 as investors watched the broader financial markets slump against a backdrop that included elevated levels of inflation and geopolitical uncertainties.

As a result, the S&P VIX Index ended the 2022 trading year higher by roughly 22% after it opened at 17.5 and closed at 21.6. At the same time the volatility tracking instrument peaked 38.94 in mid January, which equated to a 121% upside move.

PriceVol, another volatility index branded by ASYMmetric ETFs aims to calculate the complete landscape of the volatility reflected in the entire S&P 500. PriceVol noticed that levels were higher in the first half of 2022 when the S&P 500 incurred its losses. Moreover, the month of October noticed the highest PrceVol levels on the calendar year. See below a month-by-month chart of the PriceVol levels:

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Heading into 2023, market participants weigh the idea of a possible market recession and how that would impact the broader financial landscape. Therefore, as the year progresses volatility focused funds will be watched closely.

Some fund include the shorter-term volatility funds such as the iPath Series B S&P 500 VIX Short Term Futures ETN (BATS:VXX) and the ProShares VIX Short-Term Futures ETF (VIXY).

Meanwhile, the iPath Series B S&P 500 VIX Mid-Term Futures ETN (VXZ), ProShares Ultra VIX Short-Term Futures ETF (BATS:UVXY) and the 2x Long VIX Futures ETF (UVIX) will also be in focus.

In broader financial news, stock index futures pointed to a slightly higher opening on Monday following the sharp rally to end the previous week.

Now read: Implied Market Volatility Indicates Higher Stock Prices

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