Category: RISK MANAGEMENT

How Monetary Uncertainty Affects Market Volatility

Monetary policy is the process by which a government, central bank, or monetary authority manages the money supply to achieve specific objectives. In most countries, these objectives are stabilization of prices and maintenance of low inflation. Monetary policy is also used to manage economic growth, employment, and exchange rates. Monetary …

Current Expected Credit Losses (CECL)

Companies may hold various instruments. For each, they estimate the amount they can expect to receive. In most cases, it is the same as the amount calculated under the contract terms. However, it may also differ in some cases, causing a credit loss. Companies must estimate this loss to reach …

Identifying Correlation Risks of Large Portfolios

Correlation is a statistical measure of the relationship between two variables. In trading, correlation is used to identify relationships between different securities. For example, a trader might want to know if two stocks move in the same direction. If they do, they are said to be positively correlated. If they …

Determining Sovereign Credit Risks Using News Articles

Alternative data is becoming increasingly popular in the financial world. While some traditional data sources such as earnings and economic indicators are still relied upon heavily, alternative data is providing new insights that can help investors make better-informed decisions. There are a variety of sources for alternative data, including social …

How Interest Rates Affect Equity Markets?

Interest rates are a determinant factor in the pricing mechanism of public markets.  When interest rates go up, the cost of borrowing increases, and this affects economic activity and company profits. Equity markets are sensitive to changes in interest rates because they affect corporate profitability and the cost of capital. …