# VaR Decomposition

*Risk & Portfolio — Finicade finance glossary*

Breaking a portfolio's Value at Risk into where it comes from — which positions add risk (component and marginal VaR) and which offset it. It turns one number into a map of what to hedge.

**Also known as:** marginal-var, component-var, incremental-var, diversified-var, undiversified-var

**Related terms:** [Value at Risk (VaR)](https://finicade.com/glossary/value-at-risk), [Diversification](https://finicade.com/glossary/diversification), [Risk Budgeting](https://finicade.com/glossary/risk-budgeting)

**Taught in:** Risk Arena — Portfolio VaR: Correlation Is Everything

Source: https://finicade.com/glossary/var-decomposition