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FINANCIAL MARKET COURSES

Equity Portfolio Management – Risk & Return

This course looks at the fundamental concepts of expected return and risk (variance/standard deviation) in the context of equity portfolio management. Beginning with the idea of single stock risk, the course then moves on to discuss risk in the context of a portfolio. The effect of correlation between stocks on a portfolio’s standard deviation is described in detail. The course also looks at the marginal contribution of an individual stock to the overall risk of a portfolio, before concluding with an explanation of semi-variance, a downside risk measure that is used as an alternative to variance/standard deviation.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Describe the concepts of variance and standard deviation in the context of measuring the volatility associated with individual stocks

    Explain how portfolio risk is a function not only of the risk of the individual stocks, but also of the degree of correlation between the expected return on each stock in the portfolio

  • COURSE OUTLINE

    Topic 1: Single Stick Risk

    Analyzing Price Movements

    o Daily Percentage Changes

    o Calculating the Average Price Change

    o Volatility

    o Statistical Distributions

    o Standard Deviation & Confidence Levels

    Risk in a Single Person

    Topic 2: Portfolio Risk

    Origins of Portfolio Theory

    What is a Portfolio?

    Portfolio Expected Return

    Portfolio Risk

    o Portfolio Risk & Correlation

    o Diversification & Correlation

    Marginal Contribution Analysis

    Downside Risk Measures

    o Semi-Variance

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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