What you will learn
- Calculate compounded returns, annualized volatility and two-asset portfolio volatility.
- Size a position from a loss budget and evaluate the effect of leverage.
- Interpret drawdown, value at risk and stress scenarios, including their limits.
Before you begin
Comfort with percentages and square roots, and a basic idea of what returns and volatility mean.
Full lesson list
All lessons are freely available. No enrollment or payment is required.
Returns, Volatility and Correlation
- Compound returns and annualize volatility correctly.
- Calculate two-asset portfolio volatility at different correlations.
Position Sizing and Leverage
- Calculate position size from a loss budget and an exit level.
- Show how leverage magnifies gains, losses and margin pressure.
Tail Risk, Drawdowns and Stress Tests
- Calculate drawdown and the gain needed to recover.
- Explain what value at risk shows and what it leaves out.