Mosaic has a whole new look and feel (it’s been a long time coming) so I thought I’d take a little breather and explore some possibilities for predicting volatility thresholds as part of the evolving PDQ module. In this case we use the PDQ to look at XIV (the Inverse VIX ETF) vs a variety of currencies. What?, you say. How does that compute? Well, like I said… this is a jumping off point, not a final destination. The general consensus among many technical traders is that it’s easier to predict volatility than momentum in the equities markets…so let’s see how we might test that idea. As always with the PDQ, we’re using the z-score algorithm to examine the correlation and differential long/short returns from a basket of pairs, all of which have XIV as one side of each pair. We want the returns from the VIX side of the pair to consistently exceed the “pair B” side since that is the instrument being traded. Today’s snapshot suggests that XIV is a modest SHORT candidate…we could use some more confirmation to get us enthusiastic about this trade…but today’s live action at least has the trade moving in the right direction.