Risk contribution
The part of a portfolio's total dispersion attributable to one position, accounting for its relationship with the others — not its share of the money.
Formula
The numerator is the covariance of the position with the portfolio, the denominator the portfolio's dispersion. Contributions across all positions sum to that dispersion.
How to read the number
It often contradicts intuition: a position small in money but tightly linked to the rest adds more risk than a large independent one.
When the metric lies
Also known as: marginal risk contribution