Fri, Aug 22, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Investor Analytics launches VisualVaR

Friday, September 13, 2013
Opalesque Industry Update - Investor Analytics LLC, a global leader in risk analysis and risk management solutions, has announced the launch of VisualVaR™ – a new approach in communicating Risk using intuitive visual diagrams that explicitly reveal the amount of diversification in a portfolio. The patent pending approach will become part of IA’s overall suite of risk transparency services and has been made accessible on a complimentary basis for those interested in seeing how risk adds in a simulated portfolio. VisualVaR will enable allocators, fund managers and the financial industryat-large to visually comprehend the diversification dynamics of their portfolios while providing better transparency and more intuitive and effective Risk communication.

Damian Handzy, Chairman and CEO of Investor Analytics said, "We are excited that this new visual approach will assist investors and fund managers in better understanding their portfolio’s Risk. VisualVaR was designed with the specific goal of fostering more simple and intuitive conversations about Risk and Diversification.”

VisualVaR takes advantage of a useful geometric interpretation of the industry standard ‘Value-at-Risk’ (VaR) measure which shows how the risks of two parts of a portfolio interact and add together to the total portfolio risk. Risk does not add linearly: a portfolio’s total risk is not the sum of its parts due to diversification, and VisualVaR is designed to shows how those risks actually do add together.

In the VisualVaR diagram, as seen above, one part of the portfolio is always drawn as a horizontal line, representing the “base” or “starting point” portfolio’s risk. The other part of the portfolio’s risk, representing a new investment or a part of the portfolio to be analyzed is drawn from the rightmost end of that first line (shown in blue in the diagram). The direction of that second (blue) line represents the correlation between the two parts. The total risk is then the line that completes the triangle (shown in red). Comparing the lengths of the red arrow (total risk) and the grey arrow (initial risk) indicates whether the investment in question increases or decreases total portfolio risk. The diversification benefit achieved by the analyzed investment is precisely the difference between the lengths of the grey and red arrows.

Michael Poisson, Managing Director added, “VisualVaR enables allocators to better understand their existing portfolio, while individual managers will be able to demonstrate their overall improvement to an allocator’s portfolio. Additionally, this unique approach encourages more fluid and effective Risk communication within the investment community and among industry participants.”

VisualVaR effectively demonstrates how every part of the portfolio contributes to (or hedges) the total risk; how a hypothetical investment would affect the risk profile of an existing portfolio; and how risks add in practice. This same approach can also be applied to three different types of stress tests including: stressing allocation, volatilities and correlations.

In sum, VisualVaR offers a compact way of communicating how risks add, how different parts of the portfolio interact, how much or little diversification is being achieved and how various stresses impact the risk of the portfolio. VisualVaR shows the amount of diversification and allows investment and financial professionals to communicate their risk more intuitively and effectively. To learn more, please download the VisualVaR White Paper at: http://info.investoranalytics.com/visualvar-whitepaperrequest.

Investor Analytics

Press Release

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  2. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  3. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  4. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added