how is market risk measured 
a widely used measure of market risk is the value at risk var method var modeling is a statistical risk management method that quantifies a stock s or portfolio s potential loss as well as the probability of that potential loss occurring while well known the var method requires certain assumptions that limit its precision beta is another relevant risk metric that measures the relative sensitivity of an asset to broader market movements the equity risk premium erp is the implied expected return that investors demand while holding market risk in the stock market above and beyond that of the risk free rate of return 