Comparison of RFR and RRR
RFR (Relative Frequency Ratio) and RRR (Risk-Resource Ratio) are two popular tools used to measure risk across various types of investments. Although they measure the same thing, they are quite different in how they go about it.
RFR identifies the relative frequency ratio of risk versus return across investments. It looks at the gains and losses of an investment and compares them to the risk associated with it. This number is then used to identify how much of an investment is in line with its risk-return expectation.
RRR, on the other hand, is used to compare the risk versus reward exchange rate. It looks at the risk associated with each possible investment and compares it to the potential reward of the investment. This is also done to identify investments that are in line with its risk-return expectations.
The main difference between RFR and RRR is the way each measure risk. RFR looks at only the relative frequency of risk versus return, while RRR looks at the potential exchange rate between risk and reward. This difference can be important in making investment decisions, as it can help identify investments that are favourable.
Overall, both RFR and RRR are valid methods for measuring risk. Investors should use both tools when choosing investments, as they each have their benefits. RFR helps identify investments that are in line with risk-return expectations, while RRR helps identify investments with favourable risk-reward rates. Ultimately, it is up to the investor to decide which of these tools is best suited to their goals.