RiskGrades - RG


DEFINITION of 'RiskGrades - RG'

A trademarked method for calculating the risk of an asset portfolio. RiskGrades are based on a variance-covariance approach that measures the volatility of assets or asset portfolios as the scaled standard deviations of the returns.

More complex RiskGrades calculations allow for a few additional concepts:

RiskGrades (RG)


RiskGrades were developed by JPMorgan. You can use RiskGrades to determine the level of risk in your portfolio based on the following numbers:

The RGof a risk-free asset is expected to be 0 The RG of a low-risk asset is expected to be 0 - 100 Normal stocks/indexes should have an RGof 100 - 300 Stocks with an RG of 100 - 800 are considered high risk IPOs have an RG greater than 800
  1. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. ...
  2. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  3. Variance

    The spread between numbers in a data set, measuring Variance ...
  4. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  5. Covariance

    A measure of the degree to which returns on two risky assets ...
  6. Risk

    The chance that an investment's actual return will be different ...
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