Thursday, 30 June 2022 05:29

VaR Key to Help Volatility Management

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To say investors are worried about the volatility in their portfolio in the current environment would be putting it lightly. The stock market gyrations are putting investors and their advisors in a difficult place. One way to manage volatility is to help clients calculate the Value at Risk for stocks or their whole portfolio. While VaR often is thought of as a heavily quantitative endeavor it's simpler in implementation than advisors might imagine, and only a small amount of statistics is necessary to calculate the VaR. It is a handy metric because it's a good gauge of the volatility underlying securities, and can help communicate and find better securities for investors.

Finsum: VaR is pivotal to forming long-short positions for clients and is an excellent addition to an advisor's portfolio of tools.

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