Risk & Volatility Analysis

Understanding Market Risk

Volatility Index (VIX): measures market expectation of near-term volatility — higher VIX suggests increased uncertainty.
Value at Risk (VaR): estimates the potential daily portfolio loss under normal market conditions at a 95% confidence level.
Drawdown: represents the peak-to-trough decline in portfolio value, capturing the worst-case performance.

Combining these metrics provides a complete view of risk — volatility shows potential movement, while drawdown and VaR highlight the downside exposure.