Finance
Measure return and risk
When investment performance is uncertain, compute the return distribution, the volatility and the co-movement, and tell apart which risk diversification actually reduces.
Your learning route
The program order
Complete the programs in order to finish the route. Each one brings short lessons, applied practice and a realistic business case together.
Plus and Pro members can create a verifiable Stratify certificate when the route is complete.
- Program 01
Reading the return distribution
Intermediate: separate a realized return from a price, read a probability distribution over the returns that were possible, and tell an average apart from a compound outcome. By the end of this program you can put two investments on the same holding period and the same two-parameter summary before a risk and return decision.
- Separate the return from the price
Apply it: Closing case: prepare the return data for a decision
4 lessons · ≈3 hours
- Program 02
Measuring volatility and co-movement
Intermediate: tell apart what standard deviation, covariance and correlation each say about risk. By the end of this program you can measure how two assets move together and hand the diversification decision a number that is comparable across pairs.
- Turn volatility into a number
Apply it: Closing case: test the relationship between two funds
4 lessons · ≈3 hours
- Program 03
Reducing risk through diversification
Intermediate: you compute a portfolio's expected return as a weighted average of its assets and its risk from the weights, the two standard deviations and the correlation between them. By the end of this program you can quantify the diversification effect, say at which correlation the benefit disappears, and read portfolio risk off the individual asset risks.
- Weight the portfolio return
Apply it: Closing case: defend the portfolio's risk
4 lessons · ≈3 hours