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Portfolio specific risk definition

Most institutions operate in a relative world where active manager performance is compared to an appropriate benchmark.


Portfolio specific risk is a measure of active returns for an actively-managed portfolio. It is calculated by taking the standard deviation of active returns. Active returns represent portfolio return minus its benchmark return over the measurement period.

Synonyms: active risk, tracking error

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Portfolio specific risk is best-suited for measuring relative risk instead of absolute risk. | True or False?


In a Sentence

Sue:  Before you go home, can you estimate portfolio specific risk  for this new product?
Eve:  Yes, it's 4 to 6. Not the time, the range.


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portfolio specific risk
active risk
tracking error
portfolio specific variance
standard deviation
active management
performance measurement