Economics, Econometrics and Finance
4 years ago

New study reveals risk parity portfolios offer better diversification

The Journal of Investing
Risk Parity Portfolio vs. Other Asset Allocation Heuristic Portfolios
Denis B. Chaves, Jason C. Hsu, Feifei Li, Omid Shakernia

Paper Summary

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The article compares different investment strategies to see which one performs the best. They found that the risk parity portfolio and equal weighting are similar in performance, but risk parity offers better risk diversification. However, the success of the risk parity strategy depends on the types of assets chosen for investment.