Risk Measurement in Diversified Portfolios

As a portfolio manager overseeing a diversified investment portfolio, you have been asked to provide a detailed analysis of the risk exposure within the portfolio. The portfolio includes a mix of equities, fixed income, and alternative investments. You need to evaluate the various methods for measuring risk, including but not limited to Value at Risk (VaR), standard deviation, and downside risk. In your analysis, discuss how each method aids in understanding the risk profile of the portfolio and their relative strengths and weaknesses. Furthermore, consider how these measurements can influence investment decisions, and provide recommendations for reporting this risk information to stakeholders.