Measuring Risk in Diversified Portfolios

This question is centered around risk management and specifically the measurement of risk in investment portfolios.

You are managing a diversified portfolio that consists of equities, fixed income securities, and alternative investments. Over the past year, you have observed various metrics that indicate the risk profiles of these assets, including standard deviation, beta, and value at risk (VaR). In addition, you have utilized scenario analysis to assess the potential impacts of different market conditions on the portfolio's value.

Your task is to discuss how you would measure the risk of this diversified portfolio. In your answer, address the following points:

• The importance of different risk measurement metrics in the context of portfolio management.
• A comparison of at least two risk measurement techniques, including their strengths and weaknesses.
• Your recommendations for tools or methods for continuous risk assessment and rebalancing strategies.