Every portfolio is a composite of intentional market, sector, and industry-level bets. ERM3 reveals the structural core of your returns by decomposing gross performance into tangible systematic and idiosyncratic components. This institutional-grade transparency empowers intelligent investing, providing the clarity to validate your logic, own your convictions, and manage your risk.
Developers: install the CLI, then grab a key and open the API reference on riskmodels.app
npm install -g riskmodels-cliERM3 strips gross returns into market, sector, sub-sector, and residual — so you know exactly where exposure lives and how to hedge it.
The first hedge strips out the market regime that SPY explains.
Connect your entire book of business via Plaid. No CSVs or manual data entry. Our engine automatically resolves your holdings against an institutional-grade security master, ensuring your risk models are always synced with live brokerage data.
Move past the 'Factor Zoo.' Decompose your performance into Market, Sector, and Industry residuals to see the truth behind your diversification. Identify unintended concentration before it leads to a drawdown.
Translate academic insights into tradeable reality. ERM3 provides dollar-denominated hedge ratios for liquid ETFs like SPY, XLK, and SMH. Calibrate your exposure to specific industries while keeping your high-conviction idiosyncratic bets intact.
Institutional rigor with retail privacy. Your full holdings never leave your machine; our SDK runs locally on your terms.
Common questions about RiskModels
The Portfolio Risk Index (PRI) is a normalized total risk metric that measures your portfolio's volatility relative to the S&P 500. A score of 100 means your portfolio has the same total risk as SPY; above 100 means higher volatility, below 100 means lower. The PRI breaks down your risk into four components: Market (broad market exposure), Sector (industry tilts), Subsector (specific industry segments), and Idiosyncratic (stock-specific risks). View your PRI in real-time on the Dashboard Analytics tab, including historical trends to track how your portfolio's risk evolves over time.
Absolutely. Your specific portfolio holdings and financial data never reach our servers. We use a "Local-First" architecture where your data from Plaid is combined with our ERM3 risk model directly in your browser. We only see that you have linked an account at a specific institution (e.g., Fidelity or Schwab); we never see or store the actual assets you own.
Scaling allows you to adjust your market exposure without selling your winners and triggering a capital gains tax event. If your Risk Audit shows you are over-indexed to a specific sector, you can "scale down" that risk by using an inverse ETF hedge. This keeps your capital invested and growing while protecting you from targeted volatility.
Yes! The ERM3 factor data that powers this site is available via API for developers and institutional clients. Access daily updated factor metrics, decomposition endpoints, and ticker returns data. Visit the developer platform on riskmodels.app for authentication, endpoints, and getting started.