---
title: Volatility Targeting, Variance Drain, and the Financialization Effect: A Century of Evidence
url: https://www.ml-quant.com/papers/ssrn/7585278/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-10-09
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: SSRN 7585278
source_url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7585278
featured: 2026-10-09
citations: unknown
topic: Portfolio & Allocation
---


# Volatility Targeting, Variance Drain, and the Financialization Effect: A Century of Evidence

Analyzing 100 years of daily data, the study finds volatility scaling harmed returns before 1985 but improved them after, a shift attributed to derivatives markets and deregulation, with walk-forward Sharpe ratio of 1.01.

- Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7585278
- Identifier: SSRN 7585278
- Released: 2026-10-08
- First featured: Quant Letter No. 134 (2026-10-09): https://www.ml-quant.com/issues/2026-10-09/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Portfolio & Allocation
- Authors: Sparsh Patel

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