Big Gains in Short-Only Models Over Last 30-Days

New York ( – Scrolling the HedgeCoVest platform Friday afternoon there was something that stood out about the 30-day returns and the top five performing models during this time period—three of the five were short-only models and two were long/short models.


Seeing this, the natural reaction was to blame it on the market being choppy and down a little over the last 30-trading days. However, that is only part of the story. From June 19 through July 31, the S&P was down slightly (0.29%) and yet the HedgeCoVest Index Short-Only model was up 5.15%. That difference in performance is huge and a product of proper stock selection. In this case it is selecting the right stocks to short rather than the right ones to buy.

What about the other short-only models in the top five, how did they compare to their comparable sector ETFs? The Materials Select Sector SPDR (NYSE: XLB) was down 8.48% during the 30-day period while the HedgeCoVest Basic Materials Short-Only model was up twice as much as the ETF was down with a gain of 18.81%.

The third short-only model in the top five performing models in the last 30 days was the HedgeCoVest Technology Short-Only model with a gain of 4.84%. The Technology Select Sector SPDR (NYSE: XLK) was up 0.09% during this time. Here we see a case where our short-only model produced a sizable gain while the long-only ETF produced a small gain.

These three models were able to produce significant gains and gains that were much greater than the declines in the ETFs and index they are designed to provide a hedge against. Every bit of the outperformance can be attributed to timing and stock selection.

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