Risk Parity Portfolio

Sergey Okun  This article was written by Sergey Okun – Senior Financial Analyst, I Know First, Ph.D. in Economics.

Summary:

  • The risk parity portfolio technique enables us to identify optimal asset weights in the portfolio so that the contribution of each asset toward the total portfolio risk is equal.
  • I Know First provides daily market forecasts for a broad range of financial assets for six investment horizons from 3-day to 1-year which help to identify the most promising financial assets according to the AI algorithm.
  • We can build a portfolio based on the IKF AI algorithm, and construct the risk parity portfolio where each asset has the same risk contribution rate to the total portfolio risk.

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