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Portfolio Management Glossary

Welcome to the Portfolio Management Glossary on PortfolioTab. This comprehensive glossary is designed to help both novice and seasoned investors understand key terms and concepts in portfolio management. Browse through an extensive list of terms that are crucial for understanding and optimizing your investment portfolios.

A-Z Index of Terms

  • Alpha: The measure of an investment's performance relative to a benchmark.
  • Beta: A measure of a portfolio's volatility compared to the market.
  • Capital Gain: The profit from the sale of an investment.
  • Calmar Ratio: A measurement tool used by investors to evaluate the risk-adjusted return.
  • Correlation: A measure that describes the degree to which two variables move in relation to each other.
  • Daily Standard Deviation: A measure that quantifies the amount of variation or dispersion of a set of values.
  • Diversification: The strategy of spreading investments across various financial instruments to reduce risk.
  • Dividends: Dividends represent a portion of a company's earnings that is distributed to shareholders.
  • Drawdown: Peak-to-trough decline during a specific record period of an investment, fund, or trading account.
  • Efficient Frontier: A set of optimal portfolios offering the highest expected return for a defined level of risk.
  • Expense Ratio: A measure that reflects the annual cost of owning a mutual fund or an exchange-traded fund (ETF).
  • Fundamental Analysis: The analysis of a company's financial statements to assess its valuation.
  • Growth Investing: Investing in companies that exhibit signs of above-average growth.
  • Hedge: An investment made to reduce the risk of adverse price movements in an asset.
  • Income Investing: Focusing on securities that generate regular income, such as dividends.
  • Jensen's Alpha: A risk-adjusted performance measure that represents the average return on a portfolio over and above that predicted by the capital asset pricing model (CAPM).
  • Key Rate Duration: A measure of a bond's sensitivity to a change in interest rates.
  • Liquidity: The ease with which an asset can be converted into cash.
  • Liquidity Risk: Liquidity risk arises when an entity cannot obtain cash quickly enough to meet its financial obligations.
  • MAR Ratio: Aa performance metric used to evaluate the risk-adjusted returns of an investment portfolio.
  • Market Capitalization: The total market value of a company's outstanding shares.
  • Market Indices:
  • Net Asset Value (NAV): The value per share of a mutual fund or an exchange-traded fund (ETF).
  • Omega ratio:
  • Options: Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price and date.
  • Price/Earnings (P/E) Ratio
  • Portfolio Rebalancing: The process of realigning the weightings of a portfolio of assets to maintain its original risk level.
  • Portfolio risk A potential for losses in the value of an investment portfolio.
  • Quantitative Analysis: The use of mathematical and statistical methods in finance to assess investment opportunities.
  • Risk Tolerance: An investor's ability and willingness to endure declines in the value of their investments.
  • Risk-Adjusted Performance:
  • Sharpe Ratio: A measure for calculating risk-adjusted return.
  • Sortino Ratio: A measure of investment return against downside risk, focusing on harmful volatility.
  • Tail Risk:
  • Total Return: The overall return on an investment, including both capital gain and income.
  • Ulcer Index:
  • Underlying Asset: An asset on which a derivative's price is based.
  • Volatility: A statistical measure of the dispersion of returns for a given security or market index.
  • Weighted Average Cost of Capital (WACC): The average rate of return a company is expected to pay its security holders to finance its assets.
  • X-Efficiency: The degree of efficiency maintained by firms under conditions of imperfect competition.
  • Yield: The income return on an investment, such as interest or dividends received from holding a particular security.
  • Zero-Coupon Bond: A debt security that doesn't pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

How to Use This Glossary

  1. Browse by Alphabet: Click on any letter above to jump to terms starting with that letter.
  2. Search Functionality: Use the search bar to quickly find terms or concepts.
  3. Detailed Explanations: Click on any term to read a detailed explanation and its relevance in portfolio management.

This glossary is continually updated to include new terms and concepts in the ever-evolving field of portfolio management. Stay informed and make better investment decisions with the PortfolioTab Glossary.