|Overview: Upside Risk|
|Definition||The potential for an investment to do better than your expectations or target.|
|Related Concepts||Positive RiskFinancial Risk|
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What is Upside Risk?
John Spacey, November 30, 2015
Upside risk is the chance that an asset or investment will increase in value beyond your expectations. It is an example of a positive risk, or the chance that you'll achieve too much of a good thing.The idea of positive risks is somewhat controversial. It is often argued that risk is always a negative thing. Nevertheless, the concept of upside risk serves a number of useful purposes. For example, it can be a red flag that a particular fund or investment manager is taking excessive risks. Upside risk is also used to model the potential of investments. For example, comparing the upside and downside risk for a particular stock or bond. In other words, upside risk allows you to assess both potential losses and gains with risk approximations.
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