Fear-and-greed composites

Convenient labels that can hide conflicting components.

Fear-and-greed composites

| Concept | Explanation | |---|---| | Composite indicator | Combines multiple sentiment and market measures into one score. | | Fear zone | Inputs collectively reflect defensive behavior or stress. | | Greed zone | Inputs collectively reflect optimism or risk taking. | | Weighting risk | Results depend on which inputs are included and how they are weighted. | | Interpretation risk | A convenient label can hide conflicting underlying components. |

Module knowledge check

1. Why can survey responses differ from investment behavior?
2. What does a put-call ratio measure?
3. Does a high volatility index guarantee falling prices?
4. Why should composite sentiment scores be decomposed?

velaHita Academy home