Enter the expected weighted return, z-score, standard deviation, and the total value of a portfolio to calculate the value at risk.

## Value At Risk Formula

The following formula is used to calculate a value at risk.

VaR = [EWR - (Z*STD)] * PV
• Where Var is the value at risk
• EWR is the expected weighted return of the portfolio
• Z is the z score
• STD is the standard deviation
• PV is the portfolio value

To calculate value at risk, multiply the standard deviation return by the z score, subtract this result from the expected weighted return, then finally multiply by the portfolio value.

## Value At Risk Definition

A value at risk is defined as the likelihood of an investment portfolio exceeding a certain amount of monetary loss.

## Value At Risk Example

How to calculate value at risk?

1. First, determine the expected weighted return.

Calculate the expected return.

2. Next, determine the z score and standard deviation.

Calculate the z score and standard deviation.

3. Next, determine the portfolio value.

Calculate the portfolio value.

4. Finally, calculate the value at risk.

Calculate the value at risk using the formula above.

## FAQ

What is VAR?

VAR stands for value at risk. It is a measure of the confidence or likelihood of a given portfolio exceeding a certain loss. In other words, t’s a minimum loss in dollars over a given period based on probability of past performance.