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Which of the following statements is incorrect regarding Risk Parity portfolios and Risk Allocated portfolios? Once portfolios are constructed based on either methodologies, one methodology
Which of the following statements is incorrect regarding Risk Parity portfolios and Risk Allocated portfolios? Once portfolios are constructed based on either methodologies, one methodology may result in a higher overall return than the other. Once portfolios are constructed based on either methodologies, one methodology may result in lower overall risk than the other. Once portfolios are constructed based on either methodologies, one methodology may result in a more efficient allocation than the other. Both allocation methods allocate risk based on a pre-determined basis. Risk Parity portfolio ensure that the marginal contribution to risk is equal for each asset in the portfolio. Risk allocated portfolios ensure that investments with the highest risk have the highest allocation
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