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Volatility: Risks and Rewards Go Hand in Hand

If Commodities Bottom Out, Will Commodity Mutual Funds Follow?

(Continued from Prior Part)

Volatility measures: risk and reward

Investors want returns based on how much risk they accept in an investment. The higher the risk, better the reward and vice versa. Alpha, beta, R-squared, standard deviation, and the Sharpe ratio are the popular measures of evaluating mutual fund volatility measures. Let’s see how these risk measures have fared in the case of our commodities mutual funds.

Although these measures are based on historical performance of the fund and do not guarantee future returns, they are considered as powerful tools for a comparative analysis of mutual funds and risk evaluation.

The above figure shows the volatility of the returns for our commodity mutual...