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Definition of 'Downside Risk'
An estimation of a security's potential to suffer a decline in price if the market conditions turn bad.
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Investopedia explains 'Downside Risk'
You can think of this as an estimate of the amount that you could lose on a stock or other investment.
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Learn how the expected extra return on stocks is measured and why academic studies usually estimate a low premium.
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See the model in action with real data and evaluate whether its assumptions are valid.
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It's impossible to avoid disaster without trading rules - make sure you know how to devise them for yourself.
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