Using ATLASMay 2, 2026·10 min read

The Risk Screen, Step by Step

Volatility, beta, correlation, drawdown and scenarios: what to look at first and what each number should change in your decision.

Open the risk screen after you have a portfolio, not before. Its job is to tell you what you have actually built, which is often not what you thought you were building.

Read it in this order. First, volatility of the whole basket: it sets the scale of everything else. Second, maximum drawdown: it is the number that decides whether you can hold the position through a bad month. Third, the risk contribution per holding: it exposes the positions that dominate the portfolio without dominating the weights.

Then correlation. A portfolio of ten names with an average correlation of 0.8 is closer to one position than to ten, and no amount of counting tickers changes that. If the number is high, the fix is a different kind of exposure, not a different name in the same industry.

Beta tells you how much of the movement is simply the market. A portfolio with a beta near 1 will follow the index closely, so most of its performance will be explained by something you did not choose. That is fine if it is deliberate and a problem if it is a surprise.

Scenario analysis is the last step and the most uncomfortable. Running 2008, 2020 and 2022 against a current portfolio shows what survives a real shock rather than an average week. A strategy that only works in calm markets is not a strategy, it is a bet on the weather.

The point of the screen is not to make you cautious. It is to make sure every risk you carry is one you chose on purpose.

Educational material. Not investment advice.

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