Equity Derivatives and Structured Products Glossary: Relative performance risk


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Equity Derivatives and Structured Products Glossary

Relative performance risk

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Relative performance risk

Relative performance risk

The Risk that a fund manager’s choice of investments Will fail to match the performance of the Benchmark against which the fund is measured, prompting fund redemptions. A similar Risk is run by corporate treasury Risk managers who are measured against Benchmark Hedge levels. One way to address this type of Risk is with outperformance options. Relative performance Risk is also used to refer to the Risk that an individual asset Will underperform relative to its asset class. For equities, this may be measured by a stock’s Beta, its standardised covariance with respect to the relevant Equity index.

See also Specific risk

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