Active risk squared = active factor risk + active specific risk.

Can we say active factor risk is systematic risk and active specific risk is unsystematic risk?

Active risk squared = active factor risk + active specific risk.

Can we say active factor risk is systematic risk and active specific risk is unsystematic risk?

In very simple words you can say active specific risk is managers stock picking skills. E.g how he interpret the moment in a specific stock and choose it for portfolio. And active factor risk is his deviation from the benchmark to achive better result on his understanding.

factor risk i would call style.

specific risk = stock picking

Active factor risk= deviation from the benchmark in choosing industries

active specific risk= deviation from the benchmark in security selection within specific industries

Hi the formula is variance Multiplied by the difference between return on portfolio less benchmark?

anyone?

Hi the formula is variance Multiplied by the difference between return on portfolio less benchmark?

anyone?

Anyone ?

What formula Are u referring to ?

the only formula we have about those is :

Active factor risk+ active specific risk= variance = standard deviation of residual risk squared

Active risk squared = s ^ 2 (Rp - Rb) , s^ 2 is the variance?

there is no (Rp-Rb) … And yes s^2 is the variance of active risk, where active risk is the standard deviation of (Rp-Rb)