NEW YORK--(BUSINESS WIRE)--Axioma, a leading provider of decision support, risk analysis and portfolio rebalancing and performance attribution tools, announced today the launch of the new Axioma Risk Model Machine™, a unique new tool that allows clients to build customized risk models specifically tuned to their own investment processes. With risk management becoming an increasingly critical focus of portfolio management, Axioma’s new generation of customizable risk models enables clients to better manage the trade-off between risk and return, while enhancing the performance of their overall investment process.
“This is a game-changer,” said Sebastian Ceria, CEO of Axioma. “Our customizable risk models mean that clients are no longer confined to an off-the-shelf approach. Clients can now build their own proprietary risk models, locally and on site, using our IP, content and proven core models as the foundation, while adjusting factors and other parameters as they wish, so that the models they create are tailored specifically to their own process and approach.”
Focusing on the value of the new models, Ceria said: “With a tight fit to the client’s investment process, customizable risk models deliver better forecasts of risk. Customized risk models allow clients to achieve enhanced alignment between their risk and return factor models, thus avoiding undesired risk exposures.”
The Axioma Risk Model Machine™ deploys the proven business logic and statistical techniques developed for Axioma’s own fundamental and statistical risk models. Axioma’s time-tested models and best-practice research methodologies provide a solid foundation on which to build custom risk models. Clients then incorporate their own asset factor exposures and views on model responsiveness to create their own customized, proprietary risk models on site.
Brad Thilges, product manager for Axioma’s Risk Model Machine, said: “By adding their own style factors to our risk models, clients can mitigate the misalignment that occurs between risk factors and alpha factors during portfolio construction. Clients can also perform risk and return decompositions with their customized models, increasing transparency in internal and external reporting. By specifying the clients control the responsiveness of risk forecasts, creating yet more consistency in the inputs into investment decision-making.”
“We believe Axioma’s approach to customizable risk models offers clients the best of both worlds—customized, proprietary risk models fitted to their unique investment processes, and the confidence that comes from building those models on Axioma’s thoroughly tested rock-solid platform,” added Thilges.
The custom risk models generated by the Risk Model Machine are fully compatible with Axioma Portfolio Optimizer™, Axioma Portfolio-Attribution™, Axioma Backtester™, and Axioma Risk Analysis™. The models can also be readily exported to a common file format for use with third-party software.
From a functional perspective, Axioma’s Risk Model Machine builds each customized risk model from the ground up. Users choose an Axioma risk model to customize—either fundamental or statistical—before selecting parameters to customize (factor exposures, half life, style factors, etc). Users then specify the date range over which to build the new daily model.
Axioma’s Risk Model Machine utilizes an intuitive, easy-to-use GUI that allows clients to build and edit custom risk models quickly. The output includes both the model itself and a diagnostic report that assesses the quality of the model. The Risk Model Machine supports both research and production workflows where automated processing is critical.
“Five years ago, Axioma became the first commercial risk model provider to introduce daily risk models that included both statistical and fundamental flavors—an innovation that is now well on its way to becoming the industry standard,” said Ceria. “We have now taken another quantum leap forward with the launch of the Risk Model Machine.”
Ceria noted that key design elements and features of Axioma’s Risk Model Machine emerged directly from intensive research and discussions with clients, who played an important role in shaping the final product.
Concluded Ceria: “The value of the collaborative relationships we enjoy with our clients cannot be overstated. Our clients wanted a better risk model and by working together we have created a solution that achieves precisely that.”
About Axioma
Axioma, Inc. develops and markets innovative risk analysis, portfolio rebalancing and performance attribution products for the financial services industry. Founded in 1998 and headquartered in New York with additional offices in Atlanta, San Francisco, London, Hong Kong, and Singapore, Axioma helps leading financial firms manage risk, increase returns and improve operational efficiency. For more information about Axioma, please contact Topher Wurts at 212.991.4506, or visit the company’s website at www.axiomainc.com.
Axioma Risk Model Machine, Axioma Portfolio Optimizer, Axioma Portfolio-Attribution and Axioma Backtester, Axioma Risk Analysis are trademarks of Axioma, Inc.