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  Beta and Passive Risk Management Another risk measure oriented to behavioral tendencies is a drawdown, which refers to any period during which an asset's return is negative relative to a previous high mark. In measuring drawdown, we attempt to address three things:   The magnitude of each negative period (how bad) The duration of each (how long) The frequency (how often) For example, in addition to wanting to know whether a mutual fund beat the S&P 500, we also want to know how comparatively risky it was. One measure for this is beta (known as "market risk"), based on the statistical property of covariance. A beta greater than 1 indicates more risk than the market and vice versa.   Beta helps us to understand the concepts of passive and active risk. The graph below shows a time series of returns (each data point labeled "+") for a particular portfolio R(p) versus the market return R(m). The returns are cash-adjusted, so the point at which t...

  Self-control   Self-control, an aspect of inhibitory control, is the ability to regulate one's emotions, thoughts, and behavior in the face of temptations and impulses.[1][2] As an executive function, it is a cognitive process that is necessary for regulating one's behavior in order to achieve specific goals.[2][3]   A related concept in psychology is emotional self-regulation.[4] Self-control is thought to be like a muscle. According to studies, self-regulation, whether emotional or behavioral, was proven to be a limited resource which functions like energy.[5] In the short term, overuse of self-control will lead to depletion.[6] However, in the long term, the use of self-control can strengthen and improve over time.[2][6] gold trading strategy   Self-control is also a key concept in the general theory of crime, a major theory in criminology. The theory was developed by Michael Gottfredson and Travis Hirschi in their book titled A General Theory of C...