ePrivate Banking measures the market risk to which a portfolio is exposed by calculating the average loss an investor is prepared to accept over a one-week horizon based on a probability of 5%.
This conditional value at risk, or CVaR, can be set anywhere on a scale of 1 to 10 within the parameters of the strategy and can be adjusted at any time. When ePrivate Banking constructs the portfolio to match a strategy, the algorithm searches for the combination that will offer the best possible return relative to this level of risk, taking into account historical data, market cycles and your investment preferences.
Once you confirm that the strategy should be implemented, the electronic asset manager will continuously compare the level of risk you defined with the actual market risk. As soon as an asset changes to such an extent that the portfolio's overall risk exceeds the level you defined, the asset in question is sold in order to lower the portfolio's risk back down to within the defined limits. This means that you as an investor can rest assured that you will never find yourself exposed to higher risk than you are prepared to accept.