Despite ever more sophisticated risk management and measurement, investment professionals have generally overlooked a simple but powerful metric of relative risk and portfolio diversification -- the normal return gap. We develop a generalized specification of the expected difference in returns...

I examine energy stocks in the context of a diversified investment portfolio. Several factors – the importance of the energy sector, their potential to hedge energy risks, growing interest in real assets, as well as anecdotes of sophisticated investors focusing on energy investments –...