Knowledge

Every metric with its formula, a worked example, and an honest account of what it does not tell you. No investment advice, no recommendations.

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Risk & loss

How bad can it get, and how bad has it been?

VolatilityHow widely the portfolio value swings, in percent per year.
Maximum drawdownNot volatility, but the deepest decline actually endured.
Correlation and diversificationHow closely two assets move together, from −1 to +1.
Value at risk and CVaRHow bad an ordinary bad day looks.
Stress testReal crisis windows applied to your current portfolio weights.

Risk-adjusted metrics

Did the risk taken translate into return?

Sharpe ratioReturn per unit of volatility, after deducting the risk-free rate.
Sortino ratioLike Sharpe, but counting downside volatility only.

Measuring return properly

What did a portfolio really earn, independent of contributions?

Annualised return (CAGR)Total return converted into an average year.
Time-weighted returnThe quality of the investment, independent of contribution timing.

Benchmark & factors

Where does return come from: the market, known patterns, or selection?

BetaHow strongly a portfolio follows the moves of its index.
AlphaThe part of return that market movement does not explain.
Factor investingRecurring patterns that explain return differences between stocks.

Models & simulation

What simulations and backtests can show, and what they cannot.

Monte Carlo simulationThousands of possible paths instead of a single number.
Backtesting and rebalancingA strategy run backwards through price history.

This text is general information. It is neither investment advice nor a recommendation. Metrics describe past periods and allow no conclusion about future performance.