Ensuring risk parity is not a simple exercise. Balancing one dimension can have knock-on effects on other risk dimensions. It is necessary to consider all the relevant trade-offs and put a significant amount of resources into the effort. It is not easy for any fund management house to shift...
riskportfolio optimizationSharpe ratioIt is often argued in defense of Risk Parity portfolios that they maximize the Sharpe ratio if their securities have identical Sharpe ratios and identical correlations. However, securities have neither identical Sharpe ratios nor this correlation structure. In ...
Put-call parity holds that a portfolio consisting of a call option and the cash is equal in value to a portfolio consisting of a put option and the underlying asset. A trader, therefore, would get no profit out of the risk-free transaction of buying one portfolio and selling the other po...
Risk parity: This focuses on asset allocation diversification to match the amount of risk a portfolio manager is willing to take on to achieve the desired returns. Blockchain: This includes cryptocurrency and related technology. Hedge Funds vs. Mutual Funds While both hedge funds and mutual funds...
Factor investing hasevolved over a period of timefrom being only market and company-specific to various factors. Here is the image to portray the same: Factor investing evolved gradually Types of factor investing The two types of factors or characteristics of a portfolio are: ...
As a professional trader with extensive experience in the forex markets, I can attest that an FX forward is an essential tool for hedging against exchange rate risk. This financial instrument involves an agreement between two parties to exchange a specific amount of one currency for another at a...
ADI’s portfolio of reliable, rad-tolerant and long life-cycle solutions is helping Aerojet Rocketdyne engineer the most powerful rocket ever developed for NASA – making the first manned mission to Mars possible. See how Aerojet Rocketdyne is putting innovation in orbit ...
Rho is the rate at which the price of aderivativechanges relative to a change in the risk-free rate of interest. Rho measures the sensitivity of an option or optionsportfolioto a change ininterest rate. Rho may also refer to the aggregated risk exposure to interest rate changes that exist ...
During periods of dollar strength and rupee depreciation, it might be sensible to explore investing in an ETF thathedgesout currency risk. The goal of these vehicles is to give investors a return closer to the local-currency returns of a country’s stock-market indices....
and a solid balance sheet. The DD process also revealed that the company had a robust intellectual property portfolio and a talented management team. As a result, the investor confidently invested in Company X. Over time, the investment proved successful as the company’s stock price more than...