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Under the assumption of normality of returns, an active risk of x per cent would mean that approximately 2/3 of the portfolio's active returns (one standard deviation from the mean) can be expected to fall between +x and -x per cent of the mean excess return and about 95% of the portfolio's active returns (two standard deviations from the mean) can be expected to fall between +2x and -2x per ...
By gathering data about errors made, then collating, grouping and analyzing them, it can be determined whether a disproportionate amount of similar errors are being made. If this is the case, a contributing factor may be disharmony between the respective systems/routines and human nature or propensities .
Such errors in a system can be latent design errors that may go unnoticed for years, until the right set of circumstances arises that cause them to become active. Other errors in engineered systems can arise due to human error, which includes cognitive bias.
A statue in Hartlepool, England, commemorating the "Hartlepool monkey", a primate who was mistaken by locals to be a French soldier and killed.. Some researchers have argued that the dichotomy of human actions as "correct" or "incorrect" is a harmful oversimplification of a complex phenomenon.
The information ratio is often annualized. While it is then common for the numerator to be calculated as the arithmetic difference between the annualized portfolio return and the annualized benchmark return, this is an approximation because the annualization of an arithmetic difference between terms is not the arithmetic difference of the annualized terms. [6]
Additionally, there are many different types of attribution biases, such as the ultimate attribution error, fundamental attribution error, actor-observer bias, and hostile attribution bias. Each of these biases describes a specific tendency that people exhibit when reasoning about the cause of different behaviors. [3]
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A never event is the "kind of mistake (medical error) that should never happen" in the field of medical treatment. [1] According to the Leapfrog Group never events are defined as "adverse events that are serious, largely preventable, and of concern to both the public and health care providers for the purpose of public accountability." [2]