Advantages of Quantitative vs Qualitative
The traditional risk tolerance questionnaire categorizes investor’s risk tolerance qualitatively (Conservative, Moderate, Aggressive). There are many flaws with this type of risk measuremant, as “Aggressive” means different things to different people.
Riskalyze uses cutting edge technology to pinpoint, and quantify risk on a scale of 1-100. 1 is very conservative, 100 extremly aggressive. Your portfolio is also scored on the same scale.
If your portfolio score is lower than the personal score, there’s a chance you aren’t taking enough risk and will not achieve your return objectives. If your portfolio score is higher than your personal score, it’s possible you’re taking too much risk and you will capitulate and make a bad decision such as selling at the worst moment when stocks decline.
It is Critical for your scores to align!
Other Valuable Riskalyze Features
- Identifies portfolio’s range of returns over a 6 month time horizon with 95% certainty.
- Stress Tests your portfolio during bull markets (2013) and Bear Markets (Financial Crisis).
- Details risk of each individual asset in the portfoio through a risk score and provides likely range of returns.