There are many Algo strategies in Stratzy. But high return generating strategies have positive correlation. If one user decides to deploy all successful strategies together, position size goes wrong and portfolio become highly volatile. There are hardly uncorrelated strategies which makes good returns. Difficult to make a portfolio with minimum volatility which can be scaled.
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Hi @nijinwilson
I would like to clarify that while correlation is an important factor, it should not be the only criterion when selecting Algos. Every Algo is designed with a different objective, risk profile, return expectation, and market behaviour. The goal should be to build a well-diversified portfolio rather than simply combining the highest-return Algos.
It is also natural that some of the higher-return Algos may exhibit positive correlation, as they are designed to capture similar market opportunities. Deploying only such Algos together may increase portfolio volatility and drawdowns, even if the historical returns appear attractive.
Our recommendation is to create a balanced portfolio by combining Algos across different categories, risk levels, and market behaviours. This helps improve diversification and reduce dependence on a single type of market condition.
We are also continuously working on expanding our Algo offerings across different strategy types and market segments. As more Algos are introduced after thorough research, testing, and validation, users will have more opportunities to build broader and more diversified portfolios.
If you need any assistance in building a balanced Algo portfolio, I encourage you to connect with your dedicated Wealth Manager. Alternatively, you can always write to us at support@stratzy.in, and I’ll be happy to assist you further.
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