Concept · Portfolio performance & risk decomposition
Tracking error
The volatility of portfolio-minus-benchmark return; the size of the active risk.
In depth
The volatility of the active return (portfolio minus benchmark). The size of the active bet — pairs with active share to separate concentrated conviction from closet indexing.
Formula
TE = std(r_p − r_benchmark)
In the methodology
How this compares to traditional risk models →Referenced by (0)
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