Andy/iStock via Getty Images Citi Research analysts introduced a list of AI-related stocks to hedge as an alternative to shorting for investors with a bearish take on the AI theme. Although Citi analysts do not believe the AI theme is at the cusp of a bubble, some investors may feel safer hedging some AI stocks. The following list names 50 out of 100 stocks that are most negatively correlated with relative returns of high AI exposure stocks.
“Even if AI is a building bubble, a direct negative position could be too costly near-term, at least from a risk perspective,” wrote Analyst Drew Pettit in a Citi Research Thematic Equity Strategy report. In addition, this list has value and low volatility factor characteristics, he added, making it a “potentially more palatable protection trade as investors can lever up the trade to meet their own risk needs.” Finally, the lower volatility of the list does limit payoff for investors if AI significantly underperforms, but it removes some of the underperformance risk if a bubble ends up building, analysts said.
These are the AI hedge stocks, part 2: (Part 1 here) The high AI exposure is relative to the MSCI ACWI ( ACWI ). Merck & Co. Inc.
( MRK ) - Relative vs. high AI exposure: -0.43 FirstEnergy Corp.
( FE ) - Relative vs. high AI exposure: -0.43 National Grid Plc ( NGG ) - Relative vs.
high AI exposure: -0.43 AXA SA ( OTCQX:AXAHF ) - Relative vs. high AI exposure: -0.
43 ING Groep NV ( ING ) - Relative vs. high AI exposure: -0.42 .
