Noise sensitivity of portfolio selection under various risk measures

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Noise sensitivity of portfolio selection under various risk measures

We study and compare the sensitivity to estimation error of portfolios optimized under various risk measures, including variance, absolute deviation, expected shortfall and maximal loss. We introduce a global measure of portfolio sensitivity and test the various risk measures by considering simulated portfolios of varying sizes N and for different lengths T of the time series. We find that the ...

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N ov 2 00 6 Noise sensitivity of portfolio selection under various risk measures

We study the sensitivity to estimation error of portfolios optimized under various risk measures, including variance, absolute deviation, expected shortfall and maximal loss. We introduce a measure of portfolio sensitivity and test the various risk measures by considering simulated portfolios of varying sizes N and for different lengths T of the time series. We find that the effect of noise is ...

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ژورنال

عنوان ژورنال: Journal of Banking & Finance

سال: 2007

ISSN: 0378-4266

DOI: 10.1016/j.jbankfin.2006.12.003