Within the set of easy alternatives I like Gold/CHF the most, for the reasons described by Sam.
Perhaps this leads to a workable compromise: I think that Science Trader made an important point when he distinguised between (1) measuring performance in comparison to other investments, and (2) measuring sensitivity towards certain assets. In line with this I suggest that we distinguish between the chart and the correlation. For the chart I suggest Gold/CHF and in the correlation USDX.
That may sound ugly, but I think it makes sense. In the chart one will usually look how fast the curve grows. That is performance. For this it is useful to compare it with some passive no-brain strategy that also has the tendency to yield growth. That would be Gold/CHF.
The correlation can’t be used to asses performance. It can be used to assess sensitivity though. For this it is natural to consider the relation of the system with certain possible assets. The USDX makes more sense. A high positive correlation (say, 0.50) means that correlation is sensitive to USD movements, and a negative correlation (-0.50) also means that it is is sensitive for dollar movements - only in the opposite direction.
I would not use USDX in the chart because it has the tendency to remain stable in the long run. If you want to compare with something that is stable, use the $100K mark.
I understand what you mean…
Matthew, if you’re done fixing the crash, please delete the redundant copies of my post above. I love to hear myself talking, but not seven times the same.
And it contained an error:
"The USDX makes more sense. A high positive correlation (say, 0.50) means that correlation is sensitive …"
-> Then the USDX makes more sense. A high positive correlation (say, 0.50) means that the system is sensitive…
