> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fincept.in/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk parity and risk budgeting

> Portfolios whose assets (or classes, or factors) contribute risk in chosen proportions: equal risk contribution and risk budgeting for 22 risk measures, relaxed risk parity, factor risk parity and optimisation under factor risk-contribution limits; each answer shows the achieved risk contributions.

Toolset `alloc_parity`: 3 tools.

| Tool | What it does | Notes |
| - | - | - |
| `alloc_risk_parity` | Risk parity (equal risk contribution) or risk budgeting portfolio for one of 22 risk measures (standard deviation, MAD, CVaR, EVaR, CDaR, ulcer index, ...): each asset's share of portfolio risk matches its budget (equal, per asset, or equal per class). | |
| `alloc_relaxed_risk_parity` | Relaxed risk parity on variance: risk contributions near their budgets while a minimum expected return or weight rules can bind, which exact risk parity cannot honour. | |
| `alloc_factor_risk_budget` | Factor risk budgeting on a factor model of the assets: parity spreads portfolio risk across the factors by factor\_budget for one of 22 risk measures; constrained optimises the objective on variance while each factor's share of variance obeys factor\_limits (and constraints). | |

Inputs, limits and outputs are described in [Fincept Allocation](/guides/fincept-allocation). Full schemas: `fincept_describe_tool`.


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