Financial Markets

VaR: Value at Risk

“For example, if a portfolio of stocks has a one-day 5% VaR of $1 million, that means that there is a 0.05 probability that the portfolio will fall in value by more than $1 million over a one-day period” https://en.wikipedia.org/wiki/Value_at_risk

S&P: Standard and Poor’s Index. Average of 500 stocks. Law of Large numbers isn’t working here because if the stocks are independent of each other, then law of large numbers would make it as a whole constant.

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