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Volatility Drag
Glossary · Leverage
Definition
Mathematical drag on compound returns caused by volatility. Leverage amplifies this effect quadratically.
A 3x leveraged fund in a flat but volatile market underperforms because drag scales with L-squared times variance.
Terms are defined in the context of how ArthaPilot uses them. For authoritative definitions, consult the SEC, IRS, or a qualified financial advisor.