Risk morphs, and investment strategies must evolve in response. We have expanded our set of analytical metrics to include environmental, social and governance concerns to gain an even broader view of the changing environment – and to learn what adaptations we must make next.
As experienced investors know, risk takes on many forms.
Over the course of many decades investment professionals have categorised several varieties of these distinct market animals. In probabilistic exercises, they have pinned down their essential characteristics like butterflies in display cases.
While museum-quality historical examples serve a useful purpose for market observers and participants, identifying risks in the wild requires a more sophisticated set of tools.
We have met this challenge with our ever-evolving five-factor analysis matrix, which aims to capture the often-subtle signs of incipient risk from multiple observation platforms. Our five core vantage points – covering volatility, correlation, stretch, liquidity and event risks – have been regularly supplied with new viewing tools to improve the quality of data collection and analysis.