Kick off the journey by crafting your initial asset universe. This task is vital in setting the stage for the entire risk parity strategy. Why? Because choosing the right mix of assets can massively impact potential returns and risk exposure. To get it right, you'll need to rely on a blend of expertise, market insights, and comprehensive data analysis. Challenges might arise in the form of limited data or unexpected market shifts, but with the right tools and a keen eye for detail, these hurdles can be overcome. Ready to dive in?
- Understand the market landscape
- Identify potential asset classes
- Collect relevant data
- Evaluate diversification benefits
- Finalize the asset list
Get your resources in check and start listing those potential candidates!