The cash allocation in the portfolio is increased or decreased as required to meet
the targeted volatility level in order to improve the risk adjusted performance.
A volatility controlled index shifts assets between a risk component and a risk - free component to reach
the targeted volatility level.
Not exact matches
Actual results, including with respect to our
targets and prospects, could differ materially due to a number of factors, including the risk that we may not obtain sufficient orders to achieve our
targeted revenues; price competition in key markets; the risk that we or our channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders as we experience wide fluctuations in supply and demand; the risk that our commercial Lighting Products results will continue to suffer if new issues arise regarding issues related to product quality for this business; the risk that we may experience production difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; our ability to lower costs; the risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand; the risk that longer manufacturing lead times may cause customers to fulfill their orders with a competitor's products instead; the risk that the economic and political uncertainty caused by the proposed tariffs by the United States on Chinese goods, and any corresponding Chinese tariffs in response, may negatively impact demand for our products; product mix; risks associated with the ramp - up of production of our new products, and our entry into new business channels different from those in which we have historically operated; the risk that customers do not maintain their favorable perception of our brand and products, resulting in lower demand for our products; the risk that our products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs, including costs associated with warranty returns or the potential recall of our products; ongoing uncertainty in global economic conditions, infrastructure development or customer demand that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the risk that we are not able to enter into acceptable contractual arrangements with the significant customers of the acquired Infineon RF Power business or otherwise not fully realize anticipated benefits of the transaction; the risk that retail customers may alter promotional pricing, increase promotion of a competitor's products over our products or reduce their inventory
levels, all of which could negatively affect product demand; the risk that our investments may experience periods of significant stock price
volatility causing us to recognize fair value losses on our investment; the risk posed by managing an increasingly complex supply chain that has the ability to supply a sufficient quantity of raw materials, subsystems and finished products with the required specifications and quality; the risk we may be required to record a significant charge to earnings if our goodwill or amortizable assets become impaired; risks relating to confidential information theft or misuse, including through cyber-attacks or cyber intrusion; our ability to complete development and commercialization of products under development, such as our pipeline of Wolfspeed products, improved LED chips, LED components, and LED lighting products risks related to our multi-year warranty periods for LED lighting products; risks associated with acquisitions, divestitures, joint ventures or investments generally; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10 - K for the fiscal year ended June 25, 2017, and subsequent reports filed with the SEC.
But once you choose to
target a
level of risk based on your goals, time horizon, and tolerance for
volatility, diversification may provide the potential to improve returns for that
level of risk.
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Looking through the
volatility of the past few months, this measure appears to be consistent with its average
level of the inflation -
targeting period.
For this reason, merely
targeting the lowest
level of
volatility appears counterintuitive, and a more satisfactory approach would be to
target risk reduction by assigning a risk budget across different commodities and sectors.»
However, there is a second dimension to efficiency that may get lost along the way — managing how to generate the
target return with a
volatility level an investor can tolerate.
The «dots plot» in orange color represents the possible number of optimal portfolios with varying
levels of
target volatility that can be constructed from these ETFs.
But once you choose to
target a
level of risk based on your goals, time horizon, and tolerance for
volatility, diversification may provide the potential to improve returns for that
level of risk.
As portfolio weights and estimates of
volatility and correlations change through time, the Fund will increase and decrease the gross exposure in an effort to maintain its
target level of 12 % annualized portfolio
volatility.
The model calculates the realized portfolio
volatility (annualized daily
volatility) based on daily total returns, and then either increases or decreases the equity exposure of the portfolio to maintain the
target risk
level.
The
target volatility model uses dynamic asset allocation to achieve a stable
level of
volatility.
The model manages
volatility by forecasting future equity
volatility based on historic realized
volatility and then dynamically adjusts the market exposure to
target a set
level of
volatility.