Based on a methodology introduced in 1927 to analyze human skulls and later applied to turbulence in financial markets, this study shows how to use a statistically derived measure of financial turbulence to measure and manage risk and to improve investment performance

The financial crisis of 2007-2009 highlighted the importance of liquidity to many investors. University endowment funds, for example, were forced to sell publicly traded securities at substantially depressed values in order to meet funding commitments to private investments. Hedge funds engaged...