Investors, whether beginner or seasoned professionals, all have a threshold for risk. Some prefer to play it safe and favor a low-risk investment plan while others are more advantageous with a “high ...

Daniel McNulty began writing for Investopedia in 2012. His work includes articles on financial analysis, asset allocation, and trading strategies. Dr. JeFreda R. Brown is a financial consultant, ...

Last week, we received some excellent feedback in response to Monday’s article on calculating a stock’s beta. So today, I’m going to take this little-known metric one step further by showing you how ...

The Treynor Ratio is an easy-to-calculate ratio that measures portfolio performance on a risk-adjusted basis. Investors and academics have long sought for a way to compare the performance of ...

In a nutshell, beta is a measure of how reactive a stock is to overall market movements – particularly those of the S&P 500 benchmark index. Obviously, stocks move individually, and for a variety of ...

This article originally appeared in the fall 2019 issue of Morningstar Magazine. To learn more about Morningstar Magazine, please visit our corporate website. The Capital Asset Pricing Model is one of ...

Performance measures must align with portfolio use and features. Avoid Sharpe and similar ratios due to flaws; consider alternatives like trimmed alpha, median returns, and value at risk. CAGR is ...

Investors and academics have long sought for a way to compare the performance of portfolios on a risk-adjusted basis. If you can adjust for risk, you can directly compare the performance of portfolios ...