The risk in the within horizon: a test applied to Dollar Cost Averaging

This work aims to compare the goodness of the Dollar Cost Averaging investment strategy with other common strategies like Lump Sum taking into account a new concept of risk: the risk in the within horizon. By this way we want to draw attention to the risk that the investor bears during the entire investment horizon and not only at the end of this period. The question is relevant since this strategy is often used to hoard money for the retirement pension. This risk in the within horizon is measured with First Passage Time Probability and Expected Minimum Portfolio Value applied to portfolios simulated with Monte Carlo and Bootstrap. We show that Dollar Cost Averaging is preferred with respect to other non discretionary strategies in terms of risk.