Sentences with phrase «combine risky assets»

When you combine risky assets together, the overall risk of the portfolio goes down — that's one of the main principles of diversification.

Without getting into the theory, let's look at a simple (but unrealistic) example of how combining risky assets can lower the risk of a portfolio.

Portfolio theory suggests combining risky assets with risk free assets, based on your risk tolerance.

Markowitz showed that by combining risky assets that have less than perfect correlation, you can create a portfolio that has lower risk and a higher expected return than its individual components.

Not exact matches

If the risky assets have a month - end combined value less than the combined initial allocations, we rebalance them to equal weights for next month.

We assume monthly portfolio reformation frictions of 2 % of month - end combined values of risky assets.

If the risky assets have a combined month - end value greater than the combined initial allocations, we rebalance to the initial allocations and move the excess permanently (skim) to cash.

We assume monthly portfolio reformation frictions of 2 % of month - end combined values of risky assets.

Similar to high school chemistry, this piece discusses the concept of combining two risky asset classes, commodities and equities, to actually reduce overall portfolio volatility.

One measure that combines risk and return is the Sharpe ratio, which describes how much excess return you receive for the extra volatility you endure by holding a riskier asset — the higher the number, the more return you are getting for the risk.

Structured products promoted as having capital guarantee or capital protection typically combine a «safe» and a «risky» asset into one product structure.

We then start to examine how diversification through combining assets, in this case a simple stock and bond mix, works to mitigate the extreme drawdowns of risky asset classes.