We’re excited to announce that starting today, advisors now have an even greater set of choices for deciding which market risk assumptions to use when driving the Risk Number® and 95% Probability Range analytics for portfolios.
This calculates the the Six Month Probability Range based strictly on average return data, and does not incorporate capital market assumptions. This will allow Riskalyze to more closely match other portfolio analysis tools that use average annual returns.
Advanced Risk Modeling (ARM)
This is the more traditional approach many Riskalyze advisors are used to. It calculates the Six Month Probability Range based on historical data in conjunction with capital market assumptions. When ARM is enabled, the approach to modeling risk is selected at the security level. We have four different approaches: Beta-weighted, Tactical, Interest Rate Sensitive and Average Returns.
In either case, Riskalyze uses actual past return, volatility, and correlation statistics to calculate a portfolio’s Risk Number, and the upside and downside risk of the Six Month Probability Range.
Please note that we haven’t changed the default for any existing users — they all have Advanced Risk Modeling enabled. Advisors can easily set their preferences in
Settings > Account Details > Risk Model.