Glossary: terms starting with G

Average gain in positive periods divided by the average loss in negative ones.

More: Sortino ratio and Calmar ratio: measuring downside risk

How much an option's delta changes when the price rises by one unit, i.e. the curvature of the option price. Largest for at-the-money options shortly before expiry; buyers are long gamma, sellers are short.

Example: Call with price and strike 100, one year, 5% interest rate and 20% volatility: gamma 0.0188. If the price rises by 1, delta increases by just under 0.02.

More: Option pricing: where fair option prices come from · Methodology: Option pricer: how Portfolio Lab values options

The risk that a price jumps so sharply between two trading times that a hedging rule cannot react in time. With CPPI, the value then falls below the floor.

Source: Cont and Tankov (2009)

More: CPPI: portfolio insurance with cushion, floor and multiplier · Methodology: CPPI backtest: methodology

A generalization of ARCH in which today's variance also depends on the previous day's variance. GARCH(1,1) is the standard model for forecasting volatility for risk measures such as value at risk.

Source: Bollerslev (1986)

Black-Scholes for currency options: the foreign interest rate acts like a dividend yield, and the cost of carry is the domestic minus the foreign interest rate.

Source: Garman and Kohlhagen (1983)

Methodology: Option pricer: how Portfolio Lab values options

Growth at a reasonable price. The style looks for companies with high earnings growth that are not too expensively valued; Peter Lynch compared the P/E with the earnings growth rate for this purpose. A common metric is the PEG ratio: the P/E divided by expected earnings growth in percent.

Example: P/E of 20 with 25% expected earnings growth: PEG = 20 / 25 = 0.8, so by the rule of thumb (below 1) rather cheap.

Source: Lynch and Rothchild (2000)

More: Legendary investors: the investment styles of the most famous investors, from Graham to Simons

Location data from smartphones that apps pass on. They show visits to shops or plants and serve as a real-time measure of sales; under the GDPR, location data are personal data as long as they have not been irreversibly anonymized.

Source: Froot et al. (2017); European Commission (2026)

More: Alternative data: job ads, Reddit, X, satellites and card payments

Attribution of the geometric excess return (1 + R) / (1 + B) − 1 instead of the difference R − B. The effects compound across periods without correction factors and can be converted between currencies, but are less intuitive.

Example: Portfolio 6.35%, benchmark 5.60%: geometric 1.0635 / 1.0560 − 1 = 0.71% instead of an arithmetic 0.75 percentage points.

Source: Menchero (2005); Bacon (2019)

More: Multi-asset attribution: weighting schemes, top-down and bottom-up, currencies and overlays

Standard model for prices in continuous time: the log return is normally distributed with constant drift and volatility, and the price itself is lognormally distributed. The basis of the Black-Scholes model and many Monte Carlo simulations; it does not capture crashes, fat tails or periods of high volatility.

Source: Glasserman (2003)

More: Leveraged ETFs and return stacking: how they work, long holding periods, costs and research · Methodology: Methodology of the free calculators: FIRE, savings plan, withdrawal and leveraged ETF

The average growth rate with compounding: the nth root of the product of the growth factors, minus 1. It describes how fast wealth has actually grown and, over whole years, equals the CAGR.

Example: +50% and −50%: √(1.5 × 0.5) − 1 = −13.40% per period.

More: CAGR: how to calculate the average annual return correctly

Global Investment Performance Standards of the CFA Institute, 2020 edition, effective since January 1, 2020: voluntary rules on how investment managers calculate and present their performance, with composites, time-weighted returns after transaction costs and at least five years of history.

Source: CFA Institute (2019); CFA Institute (2019)

More: Portfolio reporting: how to report return, risk, attribution and costs properly

Planned transition from a riskier to a safer portfolio over time, for example an equity share that falls with age.

More: Monte Carlo simulation: how safe is your plan?

Hedge fund style that bets on the big moves in interest rates, currencies, government bonds, equity indices and commodities, based on views about the economy, monetary policy and politics. Usually implemented with futures, currency forwards and leverage; a famous example is the Quantum Fund's bet against the British pound in 1992.

Source: Mallaby (2010)

More: Legendary investors: the investment styles of the most famous investors, from Graham to Simons

Precious metal without ongoing income, held as crisis protection and a store of value. Its real price fluctuates strongly; as an inflation hedge, it only works over very long periods.

Source: Erb and Harvey (2013); Baur and Lucey (2010)

More: Gold in a portfolio: safe haven, inflation hedge or just shiny?

Values a share as a dividend that grows at a constant rate for ever: price = next year's dividend / (required return − growth). It only holds as long as growth stays permanently below the required return.

Example: Dividend $3, required return 8%, growth 5%: 3 / (0.08 − 0.05) = $100.

Source: Gordon (1959)

More: Fundamental analysis: valuing a company like an investor

Bond issued by development banks, agencies or regions that are owned or guaranteed by a state, such as Germany's KfW. Slight yield premium over government bonds.

Methodology: Risk factors in the look-through: methodology

Umbrella term for the metrics that show how an option price reacts to changes in price (delta, gamma), volatility (vega), time (theta) and interest rates (rho). Traders use them to manage the risk of entire option books.

Source: Hull (2021)

More: Option pricing: where fair option prices come from · Methodology: Option pricer: how Portfolio Lab values options

The yield discount on green bonds compared with similar conventional bonds from the same issuer: investors accept a slightly lower yield for the green label. When it rises, green bonds gain in price.

Source: Pástor et al. (2022)

More: ESG ETFs: index rules, ratings, returns and the limits of sustainable funds

A product is presented as more sustainable than it is, e.g. through names, advertising or classifications that its actual investment rules do not live up to.

More: ESG ETFs: index rules, ratings, returns and the limits of sustainable funds

Amount of electricity drawn from the public grid. It is the usual measure of electricity consumption. Electricity that households and businesses generate with their own solar panels and use themselves, without feeding it into the grid, is not included. As an economic indicator, it also fluctuates with the weather, public holidays and electricity prices.

Source: Fezzi and Fanghella (2020); Bundesnetzagentur | SMARD.de (2026)

Methodology: Economic pulse: how Portfolio Lab calculates early indicators

The sum of all positions without netting, with short positions counted at their absolute amount. Net exposure subtracts short from long positions. A margin account with leverage of 2 has 200% gross and net exposure; a market-neutral long-short portfolio has about 200% gross and 0% net.

More: Leverage in a portfolio: return, risk, costs and margin calls

Index variant that reinvests dividends without deducting any standard withholding tax; at MSCI, as received by private investors in the company's home country, excluding tax credits. It is above the net return index and is the stricter yardstick for funds.

Source: MSCI Calculation Methodology (2025)

More: Index providers and valuation points: why the same index is calculated differently

If markets were perfectly efficient, gathering information would not pay. Then nobody would do it, and markets could not be efficient. Markets are therefore at most approximately efficient.

More: The efficient market hypothesis: why it is so hard to beat the market

Stock with a high valuation that investors pay because they expect strong earnings growth. Often technology and healthcare companies.

More: Factor investing: understanding the Fama-French factors

A classification of the economic environment by rising or falling growth and rising or falling inflation. Equities like growth without inflation, bonds like falling inflation, and commodities and inflation-linked bonds like rising inflation.

More: All Weather portfolio: ready for every economic climate? · Methodology: Macro dashboard and regime analysis: methodology

Leverage with the highest median growth: L* = (μ − r − s) / σ², with average continuous return μ, financing rate r, spread s and volatility σ. Beyond it, the typical outcome falls again, even though the expected value keeps rising; for normally distributed returns, this corresponds to the Kelly criterion.

Example: Index with a 7% median return (6.77% continuous) and σ = 18%: μ = 6.77% + 1.62% = 8.39%; interest rate 2% and spread 1% (continuous 1.98% and 1.00%): L* = (8.39 − 1.98 − 1.00) / 3.24 = 1.67.

More: Leveraged ETFs and return stacking: how they work, long holding periods, costs and research · Methodology: Methodology of the free calculators: FIRE, savings plan, withdrawal and leveraged ETF