Market Sensitivity Metrics

Market sensitivity metrics, such as beta or duration, describe how much an asset or portfolio moves in response to changes in the overall market. By quantifying this sensitivity, traders can decide whether to increase or decrease their market footprint.

If a trader wants to reduce the impact of a market crash, they will seek to lower their portfolio's sensitivity metrics. These metrics are the dashboard of the portfolio's risk profile, allowing for precise adjustments and informed decision-making.

They provide an objective way to monitor and manage how closely a portfolio is tied to the broader, systemic market risks.