Glossary
Tracking Error
Tracking error measures how much a portfolio's returns deviate from its benchmark over time, usually expressed as an annualized standard deviation of that difference.
Why it matters
It quantifies how much active risk a portfolio is taking relative to just holding the benchmark, independent of whether that active risk actually paid off.
How CORVIX uses it
CORVIX runs three separate risk books, Core, Offensive Satellite, and Defensive, each on its own tracking-error budget, so a concentrated sector bet can never quietly eat the whole portfolio's risk budget.