What is the Definition and Types of Portfolio Risks? – Learn about the Analysis here


For all the people who are immersed in it world of investment assets, it is necessary to take into account the way in which our portfolio is constituted. For this, creating a good investment portfolio is everything.

Well, our investment transition will depend on this. Therefore, we must pay close attention to the role played by each of the assets in our portfolio.

Although many of us are clear that there is no portfolio template that guarantees you the greatest benefit in the short, medium, or long term without risk of loss. If there are various factors that we must take into account when forming this set.

Similarly, something very important is the risk portfolio. That is why in this article we are going to explain everything you need to know about the portfolio and the types of risk portfolio.

What is an investment portfolio?

When investing or acquiring financial assets, what is always kept in mind is to minimize the risks of loss. In this way, it is how the term of Investment portfolio.

Well, it is the entire set of investments, financial assets, bonds or mutual funds that a person or company has at any given time. Many people use a spreadsheet to keep track of their investment portfolio.

The main function of portfolio asset management is to minimize the risk of loss. Well, having a greater variety of financial investment, the risk decreases considerably.

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graphs showing portfolio risk

Otherwise, by having our investments in a single asset, the risk would be much higher and the loss will be greater. That is why people resort to diversifying their actions that guarantee greater security when investing their money.

What are the types of investment portfolio that exist?

First of all we have the indexed investment portfolio. It is characterized by its way of buying and maintaining the asset regardless of the behavior it acquires. Well, it consists of a highly diversified portfolio that works under the same behavior as a market index. Thus, it is not necessary to predict the behavior of each of the assets that comprise it.

Second, we find the active portfolio management portfolio. Unlike the previous one, this one is more dynamic since it does not keep assets for as long. Its purpose is the purchase and sale of assets following the predictions. Your goal is to beat market prices by working your assets individually.

The shares are bought when it is considered under study that those shares have a high probability of increasing in price. These shares will be sold when it is considered that they have reached a point in their price. guarantees a profit optimal or when its price is predicted to decline.

curves of risk analysis in an investment

Finally, we have the portfolio of targeted investment. This consists of choosing a high number of companies that have been previously studied in depth. And that they are considered excellent investments. Now these will keep you for a long time and get long-term benefits. That is why it is necessary to understand them even in periods where it may seem like a risk.

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Types of risks that exist in portfolios

A risk portfolio is a portfolio that is managed under risk management. For this, it is necessary to take into account the following existing risks:

  • The market risk understands the main risk within a portfolio. Well, being a system that manages prices based on supply and demand, we are exposed to a fall in value at any time.
  • The liquidity becomes risk when it is our responsibility to sell our assets at a price much lower than their current value. In this way, we must understand that it is not always possible to get our money when we want.
  • The risk of investing in a single asset It is one of the easiest to prevent by applying a portfolio model.
  • The foreign investment risk it is very difficult to avoid. Since the political situation of the countries are very dynamic.

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