Portfolio Risk and Performance Attribution
This chapter covers the calculation and interpretation of a variety of metrics for analyzing the risk of a stock portfolio and “performance attribution”—how to report returns and risk to illustrate how a portfolio's performance was achieved. We're going to take a pared-down, “what you need to know about risk” approach in this chapter. There are many outstanding sources that contain more comprehensive treatments of risk, ranging from entire books to textbooks that devote three to five chapters devoted to the topic. In an attempt to add some unique value, I am going to present more of a narrative-driven approach to the topic, starting from “square one” and building what I hope will be an easy-to-understand foundation for your deeper explorations of this topic as your careers progress.
The learning objectives for this chapter are: