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Navigating Risk Allocation in Investing
This chapter explores the intricacies of risk allocation within investment portfolios, particularly through the lens of hierarchical risk parity. It discusses the interplay between asset classes like equities and bonds, addressing the pitfalls of crowded trades and the necessity of understanding fixed-income characteristics. The narrative also highlights the evolution of risk management philosophies in investment institutions, emphasizing the importance of storytelling in making complex investment concepts accessible.