Hedging Market Exposures: Identifying and Managing Market Risks
Hedging Market ExposuresIdentifying and Managing Market RisksInHedging Market Exposures, authors and financial industry leaders Oleg Bychuk and Brian Haughey—who through the Great Recession have successfully managed a complex highly leveraged portfolio of asset-backed securities with significant equity, fixed income, credit, and other exposures—offer a practical guide to three fundamental elements of the risk control process that have not previously received the attention they deserve—identifying, quantifying,andmanagingmarket risks.Providing a practical, proactive plan to help you know the risks facing your portfolio,Hedging Market Exposuresoffers expert guidance on:How to select the appropriate tools to hedge various risksLearning the language of quantitative financeCommunicating effectively with professional risk managers and "quants''Asset modelingMarket exposures and factor sensitivitiesConstructing a hedgeThe tasks of identifying and quantifying risks and then selecting an optimal hedge when a "perfect" one does not exist are just as important as understanding the intricacies of exotic derivative valuation, but are usually overlooked. In-depth and straightforward, Hedging Market Exposures reveals how to focus not merely on quantitative measurement of risk but also on qualitative analysis and, crucially, on riskmanagement.While a manager is ultimately concerned with the risks of a portfolio as a whole, the need also exists to understand the dangers associated with the underlying portfolio constituents. In the end, it is the risks of these individual securities and, especially, the interplay of these risks that shape the portfolio's risk profile. Find out how you can identify, quantify, and manage market risks in your portfolio with the dynamic hedging strategies found inHedging Market Exposures.