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PRISM Scores

StratiFi Technologies Inc

What is a PRISM Score?

PRISM Rating (PRISM) is StratiFi’s proprietary risk scoring technology which uses a factors based approach to quantify different risks within a portfolio into a simple one to 10 scale. One signifies the lowest possible risk, and 10 signifies the highest possible risk. The PRISM software also creates an overall rating for a portfolio that blends the different factors together.

Emotions and investing

With the inevitable ups-and-downs of the market you can partner with your advisor and utilize these ratings as a helpful tool along with risk tolerance information to not only manage your portfolio risk but also help take the emotional aspects out of investing during those more turbulent times. Many investors are so focused on making money and making a lot of it, that they often have unrealistic expectations, and this blinds them to the risks that they must take to achieve any return. For advisors, it’s not only important to have an understanding of the risk level of your portfolio but also the risk level of your “flight” reaction.

Markets can be un-predictable – your reactions to them shouldn’t be.

Why PRISM?

At StratiFi we believe a much greater focus is needed on defining and managing risk than ever before. Our technology is intended to illuminate a pathway that will help advisors safeguard you and your accounts. It is our hope that PRISM will be a powerful tool to help your advisor gain a deeper understanding of the risk facing your portfolio.

What is Risk?

Portfolio risk is the chance that the combination of assets within your accounts will fail to meet your financial objectives and goals. Each investment within a portfolio carries its own risk, with higher potential return typically meaning higher risk. By using PRISM, an advisor can gain a detailed understanding of the threat presented by four key sources of risk – volatility, correlation, concentrated stock risk, and tail-event risk.

What is Tail event risk?

A sudden and severe market losses happen. This score measures how vulnerable your portfolio is in the event of a market shock. 

This is important because…

Reducing the tail risk score, advisors can provide the reassurance that a portfolio has adequate protection should something catastrophic occur with the markets.

What is Diversification risk?

When correlation in your portfolio is high, you lose the diversification benefits of your portfolio and expose yourself to a coordinated loss event.

This is important because…

Reducing the Correlation Risk Score, advisors can help create more robust portfolios that can weather a wider variety of market conditions.

What is Volatility risk?

A large percentage of your portfolio exposure represented in only a few stocks makes your portfolio more susceptible to idiosyncratic risk.

This is important because…

Reducing the Volatility Risk Score, advisors can provide clients with more predictable investment outcomes while avoiding the painful mathematics of the asymmetry of losses.

What is Concentrated stock risk rating?

While you may believe that you own a “diversified” portfolio, it is likely that you have exposure to a variety of asset classes that have in the past and will likely in the future experience a severe, coordinated loss event.

This is important because…

Reducing the Volatility Risk Score, advisors can provide clients with more predictable investment outcomes while avoiding the painful mathematics of the asymmetry of losses.