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Next filing · Form 10-Q · Q2 2026 · 29 days
Next filing · Form 10-Q · Q2 2026 · 29 daysMethodology Paper · Part III published: The One Manager Skill That PersistsAPI Update · Point-in-Time (PIT) historical commit tracking — securities and funds unifiedAPI Update · ERM3 L3 variance partition — institutional transparency releasePart 3 · The Persistence of Stock-Selection ResidualsPart 1 · One Position, Four BetsNext filing · Form 10-Q · Q2 2026 · 29 daysMethodology Paper · Part III published: The One Manager Skill That PersistsAPI Update · Point-in-Time (PIT) historical commit tracking — securities and funds unifiedAPI Update · ERM3 L3 variance partition — institutional transparency releasePart 3 · The Persistence of Stock-Selection ResidualsPart 1 · One Position, Four Bets
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    • Beyond Active Share
    • Cascade Hedging and the Cost of Interpretability
    • Decile One, Not Ticker by Ticker
    • ERM3 Cascade-Residual Persistence and the Allocator Skill Signal
    • Every Position Has a Level Too
    • NVIDIA: The Economic-Profit Burden of an AI Bottleneck
    • RiskModels Quarterly Funds Report — Q1 2026
    • The Industry Beneath the Index
    • The Persistence of Stock-Selection Residuals
    • When does a spin-off start having returns?
    • Who got NVDA right before it became benchmark exposure?
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Concept · Stock-level risk (bottom-up)

Hedge ratio

The factor exposure you'd offset to neutralize a position's exposure to that factor.

In depth

The hedge ratio turns a decomposition into a trade: the ETF dollar exposure that neutralizes a position's market/sector/subsector beta, leaving only the residual.

Compute it with the API

POST /api/decompose

# pip install riskmodels-py
client.decompose("NVDA")  # returns ETF hedge ratios

Full API docs ↗

In the methodology

Hedge ratios: making it tradeable →

Referenced by (1)

  • NVIDIA: The Economic-Profit Burden of an AI Bottleneck

    A RiskModels.app visual case study in market-implied expectations

Related concepts

Factor modelBeta (β)ResidualIdiosyncraticAlpha (α)Variance decompositionReturn attribution
← Alpha (α)Stock-level risk (bottom-up) · 6 / 8Variance decomposition →
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