Downside risk

Downside Risk
Downside risk includes both the likelihood and extent to which a stock's price may decline. Analysts use various measures to assess the downside risk of a stock.

Downside Risk
Downside Risk definition :
The risk that a security will decline in value including the implications of risk.
TSCTrade.com ...

Downside Risk
An estimation of a security's potential to suffer a decline in price if the market conditions turn bad.
Notes:
You can think of this as an estimate of the amount that you could lose on a stock or other investment.

DOWNSIDE RISK - The risk that a security will decline in value including the implications of risk.
DOWNSIZING - A company's reduction in the number of employees, number of bureaucratic levels, and overa...

Downside Risk
An assessment as to the extent that a security could decline in value--considering all possible factors that could affect the security's market price.

The big downside risk for the medium term is an outright collapse of the US dollar as a result of rolling the printing presses. The Federal Reserve chairman, Ben Bernanke, is the world's foremost scholar on the US Great Depression.

Measuring downside risk is also intuitively closer to most people's understanding of risk: it is the probability of making a loss, not that of making a bigger profit than expected.

Always look at the downside risk of each investment and decide whether you are happy with it. However, to achieve higher returns in the long run, you need to take some risk.
Shares have three opportunities/risks: ...

Downside risk Chance that a security will decline, and estimate of how much the decline might be, given factors affecting its performance.

"Asset Allocation in a Downside Risk Framework." Financial Analysts Journal, Sept-Oct 1991.
"Investment Review." Brinson Partners, Inc. 1992.
Kaplan, P. and L. Siegel. "Portfolio Theory is Alive and Well," Journal of Investing, Fall 1994.

Equity swaps do have a potentially greater downside risk than interest rate swaps, since equity returns, unlike interest rates, can be negative.

The name is mostly historical, as the first hedge funds tried to hedge against the downside risk of a bear market with their ability to short the market (mutual funds generally can't enter into short positions as one of their primary goals).

A type of principal-protected note initially engineered by Merrill Lynch that is designed to limit the amount of downside risk an investor is exposed to while also providing a return that is proportional to that of a specified stock market index.

- Participate in short-term price movements with limited downside risk - an option can have a pre-determined, fixed level of maximum potential loss.

Because of the limited downside risk of options, their prices have skewed price distributions. Also, their standard deviations would be highly dependent upon whether the options were in-the-money or out-of-the-money.

for two basic reasons: (1) if the convertible is a bond, the bond value-defined as the price at which a straight bond of the same company would sell in the same open market-is the lowest value the CV will reach; it thus represents downside risk ...

between the intrinsic value of a stock and the price below which value investors will be willing to make an investment in the given stock. It is a means by which value investors protect their capital and their portfolios from downside risk.

The FCIC would offer commercial insurance to bank lenders against the risk of default on Capital Homestead credit and would offer, for a premium paid by Capital Homestead participants, some "downside risk" portfolio insurance.

A strangle is a similar trading strategy to a straddle, but is cheaper to put in place. The further apart the two strike prices are, the lower the downside risk, but the further the asset price has to move for a profit to be realised.

a double appeal for investors: Its market value goes up if the stock price rises, but falls only to what it would be as a conventional bond if the stock prices falls. In other words, the upside potential is considered greater than the downside risk.

In other words, the upside potential is considered greater than the downside risk. While convertible bonds typically provide lower yields than conventional bonds from the same issuer, they may provide higher yields than the underlying stock.

As a result, his decision is not purely a financial one. Alan plans to eventually start a family in his new home, and the memories from that may outweigh any downside risk of depreciation in the short term.

Alternatively, it may be expressed in terms of the distance the stock could fall before the total position becomes a loss (an amount equal to the option premium), or it can be expressed as percentage of the current stock price.
Downside risk ...

downside risk The likelihood that a security or other investment will decline in price, or... downsizing The reduction in the total number of employees at a firm through terminations, retirements, or spin-offs.

See also: Banks, Saving, Values, Capitalist, Expense