VIX Index

Abstract

As already mentioned in the introduction of this research paper, volatility forecasting is a wide-spread desire of financial professionals due to the various applications where volatility is a key input. Unfortunately, however, the process of volatility forecasting still sees itself confronted with an avalanche of critique, much of which is associated with weaknesses concerning the efficient market assumption. The following chapter has the purpose of clarifying whether the VIX Index provides a solution concerning these problems and explores the performance and predictive ability of the VIX.