RiskMetrics - Module Conclusion

Module Conclusion

Know that you can take control of your financial future by managing your risk

Online trading has empowered individual investors to make their own financial decisions. With this freedom also comes the responsibility of sound risk management, which plays an increasingly important role in our economic well being.

Your investment goals, time horizon, risk preference, and market views will determine your target risk profile, which could mean taking more or less risk. Stress test your portfolio to ensure it can withstand unexpected shocks. Avoid excessive concentrations and promote diversification though balanced asset allocation. Keep in mind the virtues of disciplined long term investing: resist the temptation to time the market in favor of consistent, gradual investment. Use RiskGrades analytics to explore and measure your risk, and make sure that it is consistent with your target risk profile.

You should now be able to:

  • Apply the RiskMetrics rules for managing risk
  • Use the three basic strategies for changing your risk profile
  • Understand the benefits of diversification
  • Stress test your portfolio to reflect abnormal market condition

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