True Active Risk difference, active, between

willsucceed

How do u calculate true active risk? Is it the difference between Total Active Risk and Misfit Active Risk? or do I need to square each term and than take a square root? Thanks.

PalacioHill

true active risk = [total active risk ^2 - misfit active risk ^2]^.5

dyga

I think it's the root of -

[(std dev, manager's returns)^2 - (std dev, normal benchmark returns)^2]

Same idea as tracking risk. Not 100% sure because the book is vague.

bkballa

I stand corrected.... just re-checked the book. sorry.

Ignore my previous post. L3Aspirant's right.

strikethree

Thank you , I also think leve3aspirant is right but needed to check with someone