# Risk Parity Strategy Engine AI Agent Connect

> Deterministic risk parity portfolio allocation engine for equal risk contribution.

## Overview
- **Category:** finance
- **Price:** Free
- **Endpoint:** https://edge.vinkius.com/vk_preview_CvGeh7JedIO7fg8M6Qlfy0avWA8dhd5LuoIIW9u3/ai-agent-connect
- **Tags:** risk-parity, portfolio-optimization, quantitative-finance, asset-allocation, volatility-targeting

## Description

This MCP server provides a deterministic risk parity portfolio allocation engine. It ensures every asset contributes an identical amount of risk to the total portfolio volatility. Use `calculate_risk_parity_weights` to determine optimal capital allocation, `check_rebalance_trigger` to monitor weight drift, and `get_portfolio_performance` to analyze historical risk and reward characteristics. The engine handles target volatility scaling via leverage and enforces concentration caps to maintain diversification.

## Tools

### calculate_risk_parity_weights
Determine optimal capital allocation for equal risk contribution

### check_rebalance_trigger
Determine if the portfolio needs to be rebalanced

### get_portfolio_performance
Analyze historical risk and reward characteristics

## Prompt Examples

**Prompt:** 
```
Calculate the optimal risk parity weights for these asset returns and this covariance matrix with a target volatility of 0.10.
```

**Response:** 
```
The target weights are [0.40, 0.35, 0.25]. The current weights are [0.33, 0.33, 0.33]. Rebalance trades: Buy Asset 1 (0.07), Buy Asset 2 (0.02), Sell Asset 3 (0.08). Portfolio metrics: Annualized Volatility: 10.0%, Sharpe Ratio: 1.2, Max Drawdown: 5.4%.
```

**Prompt:** 
```
Check if I need to rebalance my portfolio if my current weights are [0.5, 0.5] and target weights are [0.4, 0.6] with a 5% threshold.
```

**Response:** 
```
Yes, rebalancing is required. The maximum drift magnitude is 0.10, which exceeds the 0.05 threshold.
```

**Prompt:** 
```
What was the Sharpe ratio and max drawdown for this equity curve: [100, 102, 101, 105, 104]?
```

**Response:** 
```
The annualized return is 8.2%, annualized volatility is 4.1%, Sharpe ratio is 2.0, and the max drawdown is 1.9%.
```

## Frequently Asked Questions

**How does the risk parity calculation work?**
The engine solves for weights such that the product of each asset's weight and its marginal risk contribution is equal across all assets. It uses inverse volatility as an initial guess for the optimization process.

**Can I set a specific target volatility?**
Yes. You can specify a `targetVolatility` in the `calculate_risk_parity_weights` tool. If the resulting volatility is lower than your target, the engine applies leverage to scale the portfolio up.

**How is rebalancing triggered?**
Rebalancing is triggered when the drift between current and target weights exceeds your specified threshold, which you can check using the `check_rebalance_trigger` tool.