Ex-Post Risk

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DEFINITION of 'Ex-Post Risk'

A type of risk measurement technique that uses historic returns to predict the riskiness of a certain investment in the future. This type of risk measure is the equivalent of the statistical variance of an asset's returns relative to its mean.

BREAKING DOWN 'Ex-Post Risk'

Using historic returns as a measure of future risk has been a traditional method used by investors to determine the riskiness of a given asset. Ex-post risk is often used in value at risk analysis - a tool used to give investors a best estimate of the maximum amount of loss that they could expect to incur on any given trading day.

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RELATED FAQS
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    Before we answer your question, let's first define tracking error and ex-post risk. Tracking error refers to the amount by ... Read Full Answer >>
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    The Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if ... Read Full Answer >>
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    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
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    The term delta refers to the change in price of an underlying stock or exchange-traded fund (ETF) as compared to the corresponding ... Read Full Answer >>
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    An investor who is overweight in a particular sector risks a loss in value for the portfolio if there is a downturn in that ... Read Full Answer >>
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