Morningstar has unveiled the latest analysis tool for investors: Risk Analyzer. This new feature is designed to assist investors with analyzing risks to their portfolio, Mark Wright, director of tools and portfolio content at the firm, told the MutualFundWire.com.

The tool is intended to identify which investments are the riskiest and provide adjustments for the risk levels in a given portfolio. The service provides a graph to illustrate what that investor could loose in a bear market.

"Investing is always a balancing act between risk and return," Wright, reported. "Now we've tipped the scales in investors' favor with a tool that removes the guesswork. And we've done it in a straightforward, meaningful way. Instead of displaying abstract measures that can confuse investors, Risk Analyzer shows potential dollar losses for a particular portfolio, something everyone can easily understand."

The Risk Analyzer is a free service, but users must register with Morningstar. It can only be used for portfolios that are entered into the web service.

"Risk Analyzer models the historic performance of each of the holdings in the portfolio," the executive continued. "It analyzes how they interact. And there are two ways you can go when you get the results. You can change holdings manually, or you can utilize an automated mechanism."

"We are looking to create more efficient portfolios. We want to help the investor answer two questions: how much risk am I taking with my portfolio? and can I make a better portfolio? What is unique about this system is that it looks at individual holdings and not asset classes," he contended.

Wright also stated that the Risk Analyzer would be perfect for 401(k) participants who might be nervous about their plans and who were looking to see if they were properly diversified. 

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