Less volatility drag does not make aggressive leverage safe.

Public research brief

A better risk estimate can improve compounding. It cannot turn a large leveraged loss into a small one.

Bongiorno and colleagues compress a neural portfolio model and train it to minimize realized variance. The economic idea is straightforward: leverage magnifies the compounding penalty from volatility, so reducing variance can be valuable even without forecasting which stocks will rise.

The interesting question is how much of that improvement survives realistic portfolio construction—and whether the remaining loss is acceptable.

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