Volatilities and correlations are not static, they can change, sometimes very suddenly, therefore the risk in a portfolio can change over time, or sometimes very suddenly. It’s a case of constantly monitoring the risks, even perhaps trying to anticipate those changes in advance and making appropriate adjustments.
Key learning objectives:
How can we calculate the volatility of a two asset portfolio?
What is the formula used for a three stock portfolio?
What are the uses of portfolio volatility in risk management?
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Introduction to Options, Pricing and Use Cases
Peter Eisenhardt • 13:18