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.

INVESTOPEDIA EXPLAINS '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
  1. Is tracking error a significant measure for determining ex-post risk?

    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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