# Volatility Targeting Strategy AI Agent Connect

> A deterministic risk-management engine that adjusts position sizes to maintain constant portfolio volatility.

## Overview
- **Category:** finance
- **Price:** Free
- **Endpoint:** https://edge.vinkius.com/vk_preview_kP4x3hU8Z8Lfec6AldGf2yHSCySVlrFGwKGPkP8j/ai-agent-connect
- **Tags:** volatility, position-sizing, risk-management, leverage, trading-strategy

## Description

This MCP server provides a deterministic risk-management engine designed to maintain a constant level of portfolio volatility. By using the `calculate_position_sizing` tool, users can determine optimal capital allocation based on historical price series and target volatility. The engine also includes `get_volatility_metrics` to analyze the current risk environment and `validate_risk_constraints` to ensure all positions remain within predefined safety limits, such as leverage caps and volatility-based stop-losses.

## Tools

### calculate_position_sizing
Determines the optimal capital allocation and trade signals for a specific point in time based on volatility metrics

### get_volatility_metrics
Provides a summary of the current risk environment and the relationship to the target

### validate_risk_constraints
Checks if the current position size and volatility levels violate the safety parameters of the strategy

## Prompt Examples

**Prompt:** 
```
Calculate my position size for a capital of 100,000 with a target volatility of 15% and current volatility of 10%.
```

**Response:** 
```
Your optimal position size is 150,000 with a leverage factor of 1.5.
```

**Prompt:** 
```
What is the current volatility ratio if my target is 15% and current volatility is 30%?
```

**Response:** 
```
The volatility ratio is 2.0, and the leverage factor is 0.5.
```

**Prompt:** 
```
Check if my current position is safe with a leverage of 2.5 and target volatility of 15%.
```

**Response:** 
```
The position violates risk constraints because the leverage exceeds the maximum cap of 2.0.
```

## Frequently Asked Questions

**How does the position sizing work?**
The engine uses the `calculate_position_sizing` tool to divide the target volatility by the current historical volatility to find a leverage factor, which is then applied to your total capital.

**What are the leverage limits?**
The strategy applies a hard cap on leverage at 2.0 (200% of capital) and a floor at 0.0 to prevent short selling.

**How are stop-losses triggered?**
A stop-loss is triggered if the current historical volatility exceeds twice the target volatility, as verified by `validate_risk_constraints`.