Comparative measurements of risk

Attempting to calculate risk through historic data can be an essential tool in providing an indication of future volatility

There are a number of comparative measurements of risk available to financial advisers when selecting suitable funds to recommend to clients, some of which are likely to become more widely used as regulatory and client demand for value increases. In real terms, measurements of risk are all by necessity backward looking or based on historic data. However, if used carefully they can be used to provide something of an indication of future risk. The most widely available of the measurements is the 12-month measurement of volatility as given by standard deviation. It is available in public...