Portfolio Risk, also known as Portfolio Volatility, shows the potential fluctuation of the expected returns.
Portfolio risk is calculated as the standard deviation of the portfolio, which considers the risk of individual investments, their weights in your portfolio and the granular correlations between pairs individual investments. For each individual investment the volatility (risk of loss) is the standard deviation of the daily returns from the geometric avg return over the past 3 years, annualised.
A high portfolio volatility means that the returns are more volatile and unstable so the risk of loss is higher.
See the formula Portfolio Standard Deviation and check out our explanatory videos.
You can find the Portfolio Alpha value on your dashboard or the Diversiview analysis page, under the ‘Performance & Benchmark’ section. The table shows two values:
- The left value indicates the portfolio alpha of the current asset allocation.
- The right value indicates the portfolio alpha of the optimal asset allocation.
*For the purpose of portfolio risk (volatility) calculations, Diversiview uses the index that you select from your profile settings. To learn how to select your preferred market benchmark, click here.
For a personalised portfolio, it is recommended that you match the portfolio risk with your own risk tolerance.
Do you know your risk tolerance level? Use our research-based questionnaire to calculate it.