5 Risk Assessment Methods Every Investor Needs
Effective risk management separates successful investors from the rest. These 5 proven methods help you evaluate and mitigate investment risks:
- Value at Risk (VaR) Analysis: Calculate potential losses over specific time periods
- Beta Coefficient Evaluation: Measure volatility relative to market movements
- Stress Testing: Simulate portfolio performance under extreme market conditions
- Correlation Analysis: Identify relationships between different investments
- Monte Carlo Simulations: Model thousands of potential market scenarios
Professional fund managers rely on these quantitative methods to make informed decisions and protect investor capital during market downturns.