facebookHow do you think about risk? Volatility / VaR / Others? - Seedly

Kelly Trinh

Backoffice technical at financial services firm

30 Nov 2019

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Robo-Advisors

How do you think about risk? Volatility / VaR / Others?

Saw Syfe is using a VAR like measure to characterize the risk of their various portfolios (as does Stashaway but at 99% level)

Just wondering how does community generally think about risk - Volatility for all those who (presumably) like options pricing, VaR nice in theory but not sure how to calculate without specialized tools, any others?

Discussion (1)

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Hariz Arthur Maloy

30 Nov 2019

Independent Financial Advisor at Promiseland Independent

I prefer annualized standard deviation as a measure to understand historical volatility. 3 standard deviations from the mean would give you the 99.7% confidence of volatility over any one year period.

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If you have all the data points which would probably be the daily price of the funds in a portfolio, you could use excel but again this is very leceh to do manually. Analytical sites like FE Analytics would do it for you.

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High volatility isn't bad and low volatility isn't always good either. It's just a reflection of risk. You want the high returns, expect the risk. And it's especially handy when deciding to do DCA over a lumpsum and can help regular investments plans work better than usual.

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