Original Blog Entry: And the Award for Bass Ackwards ETF of the Year Goes to XIVH.

JADELottery — Thu, 29 Mar 2018 15:52:04 GMT

Before we get in to this, we need to explain what Relative Value is.

The equation below shows how to calculate a relative value in relation to a fixed point in time.

Example, if the value of a Stock, ETF, ETN, Currency, etc. is $10.00 now and its value was $5.00 yesterday, then its Relative Value now is 2 ln($10.00 / $5.00) or 1.3863.

The variable value can be at any point in time, so, if we compare yesterday to yesterday, we get 2 ln($5.00 / $5.00) or 0; which means no change.

This kind of measurement makes it easier to compare different market values of different magnitudes and scale.

Below are the TVIX and XIVH ETFs compared to each other.

The TVIX is a volatility based ETF that goes up when the S P 500 goes down and goes down when the S P 500 goes up.

The XIVH is suppose to act opposite of the TVIX and from 2016-07-14 to 2018-02-05 it did.

We can see the chart on the left shows this clearly, but something has gone askew beginning 2018-02-06.

The chart on the right shows a clearly different scheme going on than what is suppose to happen.

We can put these two ETFs on a scatter plot and see the relationship more.

Below it is even more evident something wacky has happened since 2018-02-06.

Both charts have a linear regression attached to show the trend in relation to each other.

We can see before 2018-02-06 the ETFs acted exactly as they should.

However, from 2018-02-06 the XIVH now follows the TVIX; going up when the TVIX goes up.

This is completely backward from its intended profile, which you can see here https://finance.yahoo.com/quote/XIVH/profile?p=XIVH.

We put these on a combined scatter plot to see the complete change.

It's gain the award of Bass Ackwards ETF of the Year, in our opinion.

We've been making a few off the XIVH conundrum.

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