RT Journal Article
SR Electronic
T1 Practical Applications of Geopolitical Risk in Investment Research: Allies, Adversaries, and Algorithms
JF Practical Applications
FD Institutional Investor Journals
SP pa.2022.pa480
DO 10.3905/pa.2022.pa480
A1 Joseph Simonian
YR 2022
UL https://pm-research.com/content/early/2022/02/21/pa.2022.pa480.abstract
AB In Geopolitical Risk in Investment Research: Allies, Adversaries, and Algorithms, from the 2021 Novel Risk Special Issue of The Journal of Portfolio Management, Joseph Simonian, founder and CIO of Autonomous Investment Technologies, reassesses the methods of geopolitical risk analysis employed in portfolio management. First, he proposes reframing geopolitical risk through the lens of international relations theory, thereby lending a more credentialed, conceptionally grounded perspective to the qualitative data available.In addition, Simonian promotes the use of various statistical theorems and algorithms to produce quantitative data that can assist investors in identifying and responding to geopolitical risk. The article discusses game theory as another potential tool to improve investor comprehension of geopolitics, especially when used in conjunction with machine learning to simulate the efficacy of potential investment strategies. He closes with a demonstration of how geopolitical views can be incorporated into portfolio management by walking the reader through the hypothetical optimization of an investment account dealing with geopolitical risk.