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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As with Beta, Alpha is a relative rather than an absolute indicator of risk-adjusted performance. If a fund produced the expected return for the level of risk assumed, the fund would have an Alpha of zero.
A well-conceived strategic asset allocation process can improve risk-adjusted performance in a couple of critical ways:
The rating may be downgraded on material adverse changes to any of the aforementioned rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes or risk-adjusted performance.
Morningstar studied 57,000 mutual funds and ETFs in three categories -- stocks, bonds and asset allocation -- looking for what characteristics led to better risk-adjusted performance and larger inflows three years later, when those funds become eligible for star ratings.
Blackstone will liquidate the fund on or before 31 May 2016 and the company also mentioned that BXMMX sought capital appreciation through a diversified global set of exposures, traded by alternative asset managers, which demonstrated relatively low beta to traditional markets and produced attractive risk-adjusted performance.
The Lipper Awards honor those funds and fund management firms that have excelled in providing consistently strong risk-adjusted performance relative to their peers.
The Fund's rankings were based on its overall risk-adjusted performance over the three-year period.
In terms of investment performance, Jadwa's funds and mandates have consistently shown good risk-adjusted performance, relative to both global and local benchmarks.
For debt funds, the ratings look at the 18-month weekly risk-adjusted performance compared with other funds in the category.
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.

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