There are quite a number of risk measures which give key information on the risk taken by a portfolio manager. The following is the list of some risk measures used in the world of mutual funds.
Relative Volatility
Standard Deviation
Alpha
Beta
Information Ratio
Sharpe Ratio
Treynor’s Ratio
Tracking error
R Square
I will try to cover the calculation of all of them in detail and how to read them and make inferences. Before proceeding with these we will have to understand some basic mathematical terminology. Let’s start with them first.
Sathish Emmadi
Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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