PORTFOLIO RISK
Tracking Error
Measures volatility of active returns versus a benchmark.
Formula
TE = StdDev(R_p-R_b)
Variables: Portfolio return; benchmark return
What it means
Measures volatility of active returns versus a benchmark.
Example
Compute the standard deviation of periodic portfolio-minus-benchmark returns and annualize consistently.
How to interpret it
This concept should be read together with its market convention, measurement horizon and underlying instrument. BondStats presents it as an analytical reference rather than investment advice; instrument documentation and primary market rules remain authoritative.
Related Formulas
BondStats reference content is independently written. Mathematical relationships, abbreviations and market conventions are presented for educational and analytical use.