Measuring Portfolio Volatility and Downside Risk

As a financial advisor, it is crucial to effectively measure and manage the risks associated with a client's investment portfolio. Suppose you are reviewing a client's balanced portfolio consisting of equities, bonds, and alternative investments.

Given that the client has a moderate risk tolerance, you are tasked with assessing the overall risk of the portfolio. Specifically, you need to measure the portfolio's volatility and downside risk. Describe the methodologies you would use to measure both volatility and downside risk, and highlight the significance of these measures in the context of risk management.