Your size is immaterial to this discussion. Equal weight would result in a ~17:1 ratio in XLE to ES (not beta weighted). Price, not notional, otherwise you end up with a 98% XLE weighting in this case. Your chart of 851 XLE to ES is just a silly mistake. Admit you f*cked up and let's move on... and don't show that chart to your HF heavies.
At yesterday's closing marks: XLE vs. SPY for currency valuation: 1.73:1 XLE vs. SPY for volatility hedge: 1.87:1 XLE vs. ES for currency valuation: 858:1 XLE vs. ES for volatility hedge: 885:1 You use the ES for the size you can do on the best bid and offer, it is entirely relevant if you really want to make it worthwhile.
Yes, when TRADING the contracts you would want to achieve notional equivalence; while adjusting the hedge ratio for beta, vol, fx, whatever. Your CHART is suggesting 851x XLE to ES, which you can't do if you want an accurate representation on the chart. YES when TRADING, and NO when charting. Your chart is weighting XLE at 98% of the charted-value. You must use Px/Px. I mean, htf do you continue to defend this mistake?
It's obvious the simple understanding of English is definitely not a prerequisite to be a moderator, so let me spell it out slowly. I said, "I had your number the entire time" ie I knew who you were the entire time. You never fooled me. Never said "I got you", but I also never confused you with being intelligent so i'm not surprised you didn't understand my sentence.
He's not looking to make any rational point, he's just looking to promote his website. So he posts and posts and uses super big charts in his sleazy and transparent attempt to advertise.
not trying to fool anyone. simply finding these threads you make over and over again hilarious! only slightly less funny than how mad you get every time we bring it up.
I have nothing against spreaders (as I am one), or Bone in this case. Most of my trading buds are spot/fwd spreaders in vol/var and FI. I think it's petty to come in here and talk down to spot traders as though you're a retard if you don't trade relative-value. The largest HFs in the world are populated pretty evenly between arb and directional models. Don't talk down to anyone here if you can't correctly build a spread-chart.