Risk Parity for Dummies
Risk parity asset allocation systems seem to be all the rage these days.
Bonds vs Stocks?
If you are unfamiliar with the strategy, Mebane Faber has some great videos outlining how risk parity works.
Here is a source paper with the details on all the returns and information on a risk parity strategy:
We have a nice research summary and a spreadsheet entitled “Risk Parity for Dummies”, which outlines the mechanics of risk parity and levered risk parity.
Here is quick outline of the most basic risk parity strategy (click to expand):
Here is the excel spreadsheet that shows you how to actually create a risk parity portfolio (click to expand):
Note: This site provides NO information on our value investing ETFs or our momentum investing ETFs. Please refer to this site.
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Definitions of common statistics used in our analysis are available here (towards the bottom)