Tracking Error

What does it Mean? A divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge or mutual fund that did not work as effectively as intended, creating an unexpected profit or loss instead.
Investopedia Says... Tracking errors are reported as a "standard deviation percentage" difference. This measure reports the difference between the return you received and that of the benchmark you were trying to imitate.

Terms Related Links

Benchmark
Ex-Post
Ex-Post Risk
Hedge
Information Ratio - IR
Standard Deviation

Terms Related Links
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