Risk Analysis
Our Risk Analysis practice employs institutional-grade quantitative methods to identify, measure, and manage portfolio risk at every level. We go beyond standard deviation and beta to build a granular understanding of how your portfolio behaves under stress, providing a level of risk transparency normally reserved for the largest institutional investors.
Multi-Factor Risk Decomposition
We decompose portfolio risk into factor exposures — market beta, value, growth, momentum, quality, size, duration, credit spread, and liquidity. This allows us to identify unintended concentrations and distinguish between compensated and uncompensated risks in your portfolio. Most investors are surprised to discover how much of their "diversified" portfolio is driven by a single factor.
Scenario Analysis & Stress Testing
We run 200+ historical and hypothetical stress scenarios against client portfolios on a regular basis, including recreations of the 2008 financial crisis, the 2020 COVID drawdown, the 2022 rate shock, and bespoke scenarios relevant to each client's specific holdings. The outputs inform both tactical positioning adjustments and strategic hedging decisions.
Tail Risk Management
For clients with significant wealth concentration or limited capacity for drawdowns, we design explicit tail-risk hedging programs using equity options, variance swaps, and defensive macro positions. These programs are sized to reduce maximum drawdown potential by a targeted amount while minimizing the drag on expected returns.
Liquidity Risk Assessment
Particularly relevant for portfolios with private market allocations, our liquidity risk framework models cash flow requirements against portfolio liquidity across multiple market scenarios. This ensures that clients can meet capital calls, distributions, and spending needs without forced selling of illiquid positions at unfavorable times.
Important Disclosure: Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. The information presented here is for informational purposes only and does not constitute investment advice. Please consult your Stellaris Investments advisor before making investment decisions.
Key Metrics
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