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Hi ,need suggestion/guidance:will it be correct to compare/regress implied volatility of indices with different underlying currency in absolute terms. for example , comparing eurostoxx50 vol (eur) or s&p 500 vol (usd) with nikkei vol (yen) in absolute terms or one should first convert all the implied vols to same currency before doing any relative value comparison.

Since these are volatilities of returns, which are effectively price change in currency divided by price in currency, they do not have a currency unit and are fine to compare directly.

thanx . agree with you, i was actually regressing them in actual terms to look for relative valuation.However it put me in doubt while working on a vega spread. how to make position PNL linear function of spread move?suppose S&P 500-eurostoxx spread is 2 points wider above fair value and one want to bet on this 2 point convergence.Then one can do it in two ways :i) acual vega neutral (same vega amount in both currency) , orii) currency vega neutral (either euro vega falt or $ vega flat)in both cases , PNL will depend on how the spread has converged and not the spread move. PNL becomes path dependent .any idea how to solve this??

This is not really my area of expertise, but I think you put on the same $ amount in both indices. The first order effect will come from the relative volatility move, but there will be an unavoidable (I think) second order effect from currency moves.