0
What is A portfolio's risk is measured by the weighted average of the standard deviations of the securities in the portfolio It is this aspect of portfolios that allows investors to combine stocks?
Wiki User
∙ 14y ago
Beta.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
The Sortino Ratio?
I've written before about the Sharpe Ratio, a measure of risk-adjusted returns for an asset or portfolio. The Sharpe ratio functions by dividing the difference between the returns of that asset or portfolio and the risk-free rate of return by the standard deviation of the returns from their mean. So it gives you an idea of the level of risk assumed to earn each marginal unit of return. The problem with using the Sharpe Ratio is that it assumes that all deviations from the mean are risky, and therefore bad. But often those deviations are upward movements. Why should an investment strategy by graded so sharply by the Sharpe Ratio for good performance? In the real world, investors don't usually mind upside deviations from the mean. Why would they? These were the questions on the mind of Frank Sortino when he developed what has been dubbed the Sortino Ratio. The ratio that bears his name is a modification of the Sharpe Ratio that only takes into account negative deviations and counts them as risk. To me, it always made a lot more sense not to include upside volatility from the equation because I rather like to see some upside volatility in my portfolios. With the Sortino Ratio only downside volatility is used as the denominator in the equation. So the way you calculate it is to divide the difference between the expected rate of return and the risk-free rate by the standard deviation of negative asset returns. (It can be a bit tricky the first time you try to do it. The positive deviations are set to values of zero during the standard deviation calculation in order to calculate downside deviation.) By using the Sortino Ratio instead of the Sharpe Ratio you’re not penalizing the investment manager or strategy for any upside volatility in the portfolio. And doesn’t that make a whole lot more sense?
How does a credit department manage their credit portfolio?
Credit departments, generally referred to as risk management departments, use a variety of processes to manage their portfolios. The generic components are as follows: * Underwriting * Servicing * Notification * Acquisition * Retention
How can he return and standard deviation of a portfolio be determined?
How can the return and standard deviation of a portfolio be deteremined
When was the modern portfolio theory developed?
. Harry Markowitz established the foundation of modern portfolio theory in 1952.
How scoring rubric related to portfolio?
Scoring rubrics have a relation to portfolio assessment because they are both evaluating the outputs of every learner.................................
What is the plural from of portfolio?
The plural of portfolio is "portfolios".
What do understand by 'Portfolio risk?
One important point about the estimation of standard deviation is the distinction between individual securities and portfolios.Standard deviations for well-diversified portfolios are reasonabily steady across time, and therefore historical calculations may be fairly reliable in projecting the future. Moving from well-diversified portfolios to individual securities, however, makes historical calculations much less reliable. Fortunately, the number one rule of portfolio management is to diversify and hold a portfolio of securities, and the standard deviations of well-diversified portfolio may be more stable.Something very important to remember about standard devitaion is that it is a measure of the total risk of an assset or a portfolio, including, therefore both systamatic and unsystematic risk. It captures the total variability in the assest or portfolio's return, whatever the source of that variability.In summary, the standard deviation of return measures the total risk of one security or the total risk of a portpolio of securities. The historical standard deviation can be calculated for individual securities or portfolios of securities using total returns for some specified period of time.This ex post value is useful in evaluating the total risk for a particular historical period and in estimating the total risk that is expected to prevail over some future period.The portfolio risk is not simply a measure of its weighted average risk. The securities that a contains are associated with each other.The portfolio risk also considers the covariance between the returns of the investment.
Three factors that cause US investors to consider including various global securities in their portfolios?
Three factors investors take into consideration when adding global securities to their portfolios are these: * Domestic securities may be in a slump, however, that may not be the case in certain economies abroad. Thus making an investment overseas can be an opportunity; * The overseas stock must have the liquidity of being actively traded in foreign stock and bond exchanges; * The investment must be in a nation where there is a record of financial stability. Switzerland for example would fit that criteria; and * Diversification in the portfolio via global investments can be obtained.
What is the plural for portfolio?
The plural form of portfolio is portfolios.Portfolio's is a singular possessive noun. The plural possessive form is portfolios'.
What is the price of a share in a mutual fund?
The price investors pay for a share of the company is based primarily on the market value of the securities in the portfolio
What is A company that uses the money it receives from investors to buy securities from corporations and governments?
A company that uses the money it receives from investors to buy securities from corporations and governments is called an investment company. These companies pool money from multiple investors and use it to purchase a diversified portfolio of stocks, bonds, or other securities on behalf of their investors. Examples of investment companies include mutual funds, exchange-traded funds (ETFs), and closed-end funds.
How do you use portfolios in a sentence?
The Minister of Education tended to their portfolio with due diligence.
Where can I get a web design portfolio?
You can find web design portfolio and what the benefits are at the following websites...www.1stwebdesigner.com/.../web-designer-portfolios-2012/ or webdesign.about.com ... Working in Web Design Portfolios
What is the plural possessive for portfolio?
The plural form of the noun portfolio is portfolios.The plural possessive form is portfolios'.
What allows you to pool your money and invest in a portfolio with other investors?
pool your money and invest in a portfolio with other investors
Why should investment securities even be separated into different classifications?
The given criteria of company's ability to do as it wishes and its intention to do what it states should definitely not be the sole criteria to be used for classifying investment securities. It is extremely important to classify securities based on their ability and purpose in order to help investors identify the right kind of securities to invest in and make a balanced portfolio.
What did you observe to be the most commonly used portfolio?
The three types of portfolios are working portfolios, showcase portfolios, and assessment portfolios. The latter is the most current type because it shows a students work and mastery of key curriculum objectives.
