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
226%
Sharpe Ratio
3.23
Max Drawdown
-23%
Volatility
30%
CAGR
137%
Sharpe Ratio
3.06
Max Drawdown
-27%
Volatility
34%
CAGR
136%
Sharpe Ratio
2.73
Max Drawdown
-28%
Volatility
38%
CAGR
200%
Sharpe Ratio
3.12
Max Drawdown
-36%
Volatility
44%
CAGR
234%
Sharpe Ratio
2.98
Max Drawdown
-32%
Volatility
43%
CAGR
229%
Sharpe Ratio
2.99