As a portfolio manager, you need to assess the risk associated with your investment portfolio. One of the widely used metrics for this purpose is Value at Risk (VaR). VaR provides an estimate of the potential loss in value of an asset or portfolio over a defined period for a given confidence interval.
Consider the following scenario: You have a portfolio valued at $1,000,000. After conducting a statistical analysis, you determine that the one-day 95% Value at Risk of this portfolio is $50,000. This indicates that there is a 95% confidence that the portfolio will not lose more than $50,000 in one day.
Based on this context, which of the following statements accurately describes the implication of the 95% VaR measure?