@lucysherw

Quantitative portfolios must measure tail risks with VaR and CVaR while embedding stress testing. VaR offers baseline risk estimates, while CVaR captures worst-case losses beyond the tail. Integrating scenario stress tests—like 2018 drawdowns or DeFi hacks—validates whether tail exposure exceeds tolerance. Combining statistical models with scenario analysis avoids overreliance on normal distributions. CVaR-adjusted position sizing ensures survivability during crises. By dynamically recalculating VaR/CVaR across regimes, traders align exposure with prevailing market risk, embedding resilience into automated execution frameworks.

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