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
-35%
Volatility
35%
CAGR
96%
Sharpe Ratio
2.13
Max Drawdown
-34%
Volatility
28%
CAGR
61%
Sharpe Ratio
1.86
Max Drawdown
-35%
Volatility
29%
CAGR
60%
Sharpe Ratio
1.75
Max Drawdown
-30%
Volatility
33%
CAGR
73%
Sharpe Ratio
1.84
Max Drawdown
-40%
Volatility
37%
CAGR
81%
Sharpe Ratio
1.80
Max Drawdown
-36%
Volatility
36%
CAGR
82%
Sharpe Ratio
1.86