Risk Parity

Risk parity is an investment strategy that aims to balance risk across different asset classes, such as stocks, bonds, and commodities. Instead of allocating funds based on the size of each investment, it allocates based on the level of risk each asset carries. This approach seeks to diversify investments more effectively, reducing potential losses during market downturns. By doing so, it strives for more stable and consistent returns over time. Essentially, risk parity focuses on spreading out risk evenly to create a resilient and well-balanced portfolio.