Risk Analytics for Portfolio Construction and Asset Allocation

Combining industry standard allocation and optimization techniques with our patented fat-tailed risk management software framework, the Cognity risk analytics platform arms fund managers and multi-manager investors with a comprehensive suite of portfolio construction capabilities. Leveraging both qualitative research and quantitative insight, portfolio managers, quantitative analysts and asset allocators can:

• Screen and rank with true downside measures
• Identify portfolio hot spots and safe spots
• Select optimal risk-adjusted performers
• Optimize tail risk and tail return
• Allocate and rebalance interactively & intuitively
• Re-allocate active tail risk
• Build tail risk overlay strategies

The key results are:

• Diversified holdings
• Improved investment performance by actively managing tail risk
• Quantitative checks of fundamental portfolios
• Insight into sector tail dynamics
• Enhanced pairs selection

Tail Risk Budgeting

Cognity goes beyond classical risk budgeting with its patented ETL framework for “tail risk” budgeting. Maximizing expected returns per unit of allocated downside risk, Cognity’s visual tail risk analytics environment transforms risk measurement into returns management. As the only commercial risk management software platform offering true downside risk budgeting, Cognity risk analytics drive consensus between portfolio and risk managers by clearly identifying tactical rebalancing opportunities in a common portfolio construction view.

Fat-tailed Optimization
Deploying patented fat-tailed modelling processes on the same risk management software system, Cognity is the only platform to deliver ETL efficient portfolios optimized for minimum tail risk and maximum tail return. Combining market expectations, internal policy and risk tolerance levels, Cognity produces diversified strategic tail-adjusted allocation guidelines across asset class, sector and geography.

Tail Hedged Overlay Strategies

Hedge overlays are power vehicles for actively mitigating risk. Understanding the tail dynamics of your underlying assets is essential prior to applying any hedging strategy. Cognity risk management software provides a unique lens into both these tail dynamics with powerful insight for:

• Accurate decisions based on both tail loss and tail return when allocating into hedge overlays in multi-asset class portfolios
• Effective beta rebalancing of multi-manager portfolios with gated or illiquid assets
• Assessing true cost and impact of potential overlays through powerful What-if scenarios

Combining our patented risk management software with ground breaking portfolio construction capabilities, Cognity is the most comprehensive commercial risk analytics platform available today.