Hi there, I'm trying to fully understand my portfolio risk. I have a portfolio of 24 Darwins and my equity at risk is right now 3,50% vs a 10% max risk. But I want an equity at risk of 10% (like the VaR).
So, two questions:
1) As my equity at risk is lower than my max risk, will I get less returns from a specific Darwin, than a investor that only invest in that Darwin? I mean, if my portfolio is unleveraged, with a total amount of $24000 invested, and $1000 in one specific Darwin, will I get the same return than other investor that invested $1000 only in this Darwin? I'm getting an "equity at risk" of 3,5%, and the other investor will get an "equity at risk" of 10%. (I guess that the answer is that I'll get the same return, but just to be sure).
2) To increase my equity at risk to 10%, what can I do? I don't want to reduce the number of Darwins in the portfolio because I hope such big number will reduce DD. Should I leverage my account to increase my equity at risk? Would this be the advisable way?
Well, a third question arises: would this be a good strategy to get the less DD possible with the biggest returns? I mean, having a portfolio with lots of Darwins to get the lowest possible "equity at risk", and then leverage it as much as possible? Wouldn't that give (statistically) better adjusted returns than the same "equity at risk" with one Darwin in portfolio and without leverage?