RiskGrades—the only way to calculate the risk of an asset that could be yours!
RiskGrades (RG) is a trademarked method for calculating how risky an asset is. Since it’s trademarked, you can bet it’s not an easy calculation. In general though, RGs are based on variance and covariance of asset volatility.
RiskGrades work on a scale, but that scale isn’t static, like 0 - 100. It starts at 0, the least risky rating, but there’s no ceiling, as the scale can change dramatically as risk changes in the market, and as it increases in the overall market. For reference, right now, over 800 RG is a big risk. That’s things like IPOs for companies with no earnings...risky startups where venture capitalists play with money like it's poker chips in a friendly home game.
A middle ground RG would be around 100 to 300. If you’re nearing retirement, you’d probably want to be largely invested in assets with RG of less than 100. If you’re young, riding the risk train while time is on your side, you have a lot of room to play, with assets in the range of 100 to 800 RG.
