Puts can also be used to limit portfolio risk, and may be part of an option spread.
"Some people would consider emerging markets more volatile, but they actually reduced portfolio risks," he said.
As a result of this, the first quarterly report released in 2012 showed a portfolio risk that was the lowest in two years.
"They need that information to reduce their portfolio risk."
In addition, they have extended our understanding of the nature of portfolio risk and exactly what is achieved by diversification.
"So then it's a portfolio risk versus a single company."
A rating of 1 reflects high asset quality and minimal portfolio risks.
Few investors appreciate the subtle relationship between stock-picking and overall portfolio risk.
Expected shortfall is a coherent, and moreover a spectral, measure of financial portfolio risk.
Americans once invested abroad to reduce portfolio risk - if the United States market fell, foreign ones often rose.