Risk Visualization and Articulation

Risk is both very difficult to visualize and extremely challenging to describe. It is both nonlinear and nonadditive. Furthermore, the risk of a single position cannot be independently quantified but can be properly measured only in the context of an overall portfolio. What may represent a risk-mitigating hedge in one portfolio can represent an extremely risky position in another.

Comparative Statistics

Because risk is extremely difficult to understand and communicate on an absolute or isolated basis, it is typically best communicated on a comparative basis. The two primary dimensions of presenting risk on a comparative basis are:

Across time. The primary cause of unanticipated hedge fund behavior ...

Get Hedge Fund Risk Fundamentals: Solving the Risk Management and Transparency Challenge now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.