Skip to main content

A More Comprehensive Way to Track Hedge Fund Risks

Representation of the stock market

Measuring hedge fund risks

When stock market exchanges and other traditional forms of investments underperform in the market, investors look for portfolio diversification, lower risk, and steady returns on stock investments. A popular alternative is investing in hedge funds such as pension funds, banks, and universities' endowment funds.

How we measure and monitor the risks associated with hedge funds is crucial for the stability of the financial market. However, the current statistical measures are inappropriate especially because they do not take into account the dynamics of risk during financial crises. Finance researchers believe that more comprehensive measures are needed to better track hedge fund risks.

What’s this research project about?

Professor RacicotFrançois-Éric Racicot, a Full Professor at the Telfer School of Management at the University of Ottawa, has received an Insight grant by the Social Sciences and Humanities Research Council (SSHRC) to develop comprehensive measures of tail risk for the hedge fund industry and examine how these new measures respond to macroeconomic and financial shocks.

Who will gain from this research?

Insights gained from Professor Racicot’s research will contribute to the academic debate about hedge fund risks. As his novel model will measure and track risks associated with hedge funds and the tail risks of other financial institutions, his project will also benefit central banks and policy-makers who need to develop strategies to maintain the stability of the financial market.

The Telfer School of Management is committed to developing cutting-edge research in a variety of topics in management. As our faculty continues fostering research excellence, the Telfer School community and partners also benefit from valuable insights with impact. Over the next weeks, we will give an overview of the five research projects that received the prestigious SSHRC Insight grant in 2019.

Learn more about the SSHRC Insight Program.