> For the complete documentation index, see [llms.txt](https://wpahelp.windhamlabs.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://wpahelp.windhamlabs.com/optimization/risk-aversion.md).

# Risk Aversion

What is the risk aversion parameter?

Risk aversion specifies how many units of expected return we are willing to forfeit in order to decrease risk (variance) by one unit. A higher risk aversion would suggest a conservative investor and would tilt the optimal portfolio away from highly volatile assets.