Risk Overlays can help adjusting factor exposures based on shifting market regimes. They help downweight factors like when is negative, and substantially boost risk-adjusted returns in certain cases. There are two types:
Factor Risk Overlays: based on the factor's own past performance (endogenous)
Risk Regimes: based on overall crypto market performance and state (exogenous), like funding rates, etc.
Max Drawdown
-28%
Volatility
39%
CAGR
225%
Sharpe Ratio
3.23
Max Drawdown
-23%
Volatility
29%
CAGR
136%
Sharpe Ratio
3.06
Max Drawdown
-27%
Volatility
33%
CAGR
136%
Sharpe Ratio
2.73
Max Drawdown
-28%
Volatility
37%
CAGR
199%
Sharpe Ratio
3.11
Max Drawdown
-36%
Volatility
43%
CAGR
232%
Sharpe Ratio
2.98
Max Drawdown
-32%
Volatility
43%
CAGR
228%
Sharpe Ratio
2.98