Risk Management

At EC Assets, risk comes before return: loss tolerance is defined first and expected return is the residual. This guide collects the Knowledge Hub's risk-management entries — the measures (VaR, expected shortfall), the processes (stress testing, risk budgeting) and the sizing discipline that turn a collection of positions into a portfolio with bounded outcomes.

All entries in this guide

• Expected Shortfall — Expected shortfall, or conditional value-at-risk (CVaR), is the average loss in the cases where…
• Kelly Criterion — The Kelly Criterion is a mathematical formula for position sizing that maximises the geometric growth rate…
• Leverage — Leverage is the use of borrowed capital to increase investment exposure. It amplifies both returns and…
• Liquidity — Liquidity is the ease of converting an asset to cash at a fair price. It encompasses both market liquidity…
• Sharpe Ratio — The Sharpe Ratio measures the excess return of an investment over the risk-free rate, divided by the…
• Value at Risk — Value at Risk (VaR) estimates the loss that a portfolio would not exceed with a stated probability over a…

More topic guides

• Options & Derivatives
• Volatility
• Macro & Multi-Asset
• Performance Measurement
• Hedge Funds & Alternative Strategies

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