Indexology®: The Disparity Of Risk Parity
October 13, 2014 at 06:00 AM EDT
The simple concept of risk parity is that within a portfolio, each investment contributes equally to the overall portfolio risk. For example, a portfolio with a capital allocation of 50% equities and 50% t-bills, has a risk profile where over 99% of risk comes from the equities. In a risk parity...