Risk-adjusted performance

Risk-Adjusted Performance

The performance of a security or investment relative to its risk. One may calculate the risk-adjusted performance in a number of ways. One may consider the investment's volatility. Alternatively, one may compare its performance to the performance of the market as a whole or relative to securities or investments with similar levels of risk.

Risk-adjusted performance.

When you evaluate an investment's risk-adjusted performance, you aren't looking simply at its straight performance figures but at those figures in relation to the amount of risk you took (or would have taken) to get the return the investment produced.

One method is to investigate the investment's price volatility over various periods of time, including different market environments.

For example, you might consider how far the price fell in the most recent bear market against its price in a bull market, or how it performed in a recent market correction. In general, the greater the volatility, the greater the risk.

However, many analysts believe that looking exclusively at past performance can be deceptive in evaluating the risk you are taking in making a certain investment, since it can't predict what will happen in the future.

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The Lipper Fund Awards program honors funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers, based on Lipper's proprietary performance-based methodology.
Michelle McCloskey, New York-based Senior Managing Director of FRM, said, "We look forward to working closely with our new colleagues with the aim to deliver positive risk-adjusted performance for our clients.
Risk-adjusted performance and bank governance structures.
Mashreq Capital's MQ3 assessment reflects the strategic and operational backing provided by its parent company, the high level of experience and qualifications of its professionals, as well as the good risk-adjusted performance of its funds and segregated mandates.
The Lipper Fund Awards program honors funds that deliver consistently strong risk-adjusted performance, relative to peers.
The award is presented to funds that have excelled in delivering consistently strong risk-adjusted performance relative to peers.
The distinction is based on consistent risk-adjusted performance in the United Arab Emirates Equity category relative to its peers.
The Lipper Fund Awards methodology praises consistent return over time and the Khaleej Equity Fund demonstrated an outstanding risk-adjusted performance over three years, outperforming its peers while keeping risk within reasonable budget," Lipper's head of Research for Western Europe and the Middle East Dunny Moonesawmy said.
The company's ratings business tracks the risk-adjusted performance of more than 16,000 mutual funds and more than 6000 stocks, and uses models to evaluate more than 13,000 financial institutions including insurers, HMOs, health plan companies, banks and savings and loans.
In April 2006, Nikko AM won Asian Investor's 2006 Achievement Award in Japan Equity in the five year risk-adjusted performance category.
The analysis supporting this assessment could be as simple as a risk map prepared for each business unit or as sophisticated as deploying risk-adjusted performance measurement.
To optimize risk-adjusted performance, executives are turning to holistic, enterprisewide risk measurements across all lines of business and risk elements, economic determinations of capital needs, earnings-at-risk and embedded-value-at-risk, as well as risk-adjusted returns on capital.

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