Stewart Strawbridge, a graduate of Bowdoin College, currently serves as a managing member at Selkirk Management LLC. Along with co-founders Tom Oatman and Christian Amundsen, Stewart Strawbridge leverages his position at Selkirk to develop global secular themes for both short- and long investments in equities. His responsibilities include the management of portfolio risk and exposure levels.

1. How to Measure Portfolio
Risk
By Stewart Strawbridge

2. Introduction

Stewart Strawbridge, a graduate of
Bowdoin College, currently serves as a
managing member at Selkirk
Management LLC. Along with cofounders Tom Oatman and Christian
Amundsen, Stewart Strawbridge
leverages his position at Selkirk to
develop global secular themes for both
short- and long investments in equities.
His responsibilities include the
management of portfolio risk and

3. About Risk Management

Risk management is a vital part of the financing and
investment field. Being able to successfully calculate
when to invest and when to divest separates the elite
portfolio managers from their peers. There are three
basic formulas for calculating portfolio risk at any given
time. When using the Beta measurement for portfolio
risk, current movements in the market are emphasized
above all other factors. When using the Beta
measurement, the market as a whole is designated a
score of 1.0, while portfolios with a higher score present
both increased risk and potential value. Alpha
measurements are constructed in a similar
fashion, though they prioritize trends in stock prices
over general market movements. The third and most
complex way of gauging portfolio risk is the Sharpe
ratio. Using this method, the standard deviation of a
portfolio is used to determine a portfolio’s increase in
value in relation to its increase in risk.