25+ Risk Metrics Explained

Risk Metrics Guide

Understanding 25+ risk measurements.

Return Metrics

1. 1. Total Return: Absolute gain/loss
2. 2. Annualized Return: Yearly equivalent
3. 3. Monthly Return: Average per month
4. 4. Risk-Adjusted Return: Return per unit of risk

Volatility Metrics

1. 5. Standard Deviation: Price variability
2. 6. Variance: Squared deviation
3. 7. Beta: Market sensitivity
4. 8. Correlation: Asset relationships

Downside Metrics

1. 9. Maximum Drawdown: Largest peak-to-trough decline
2. 10. Value at Risk (VaR): Potential loss at confidence level
3. 11. Conditional VaR: Expected loss beyond VaR
4. 12. Downside Deviation: Negative volatility only

Risk-Adjusted Metrics

1. 13. Sharpe Ratio: Return/risk ratio
2. 14. Sortino Ratio: Return/downside risk
3. 15. Calmar Ratio: Return/max drawdown
4. 16. Information Ratio: Active return/tracking error

Credit Metrics

1. 17. Default Rate: Historical defaults
2. 18. Recovery Rate: Amount recovered from defaults
3. 19. Collateral Ratio: Asset backing
4. 20. Credit Rating: Quality assessment