Whats the difference between EaR, VaR, and EVE?
Earnings at Risk typically looks only at potential changes in cash flows/earnings over the forecast horizon. Value at risk looks at the change in the entire value over the forecast horizon. Economic Value of Equity also looks at value change, but typically over a longer forecast horizon than VAR (up to 1 year). In a trading environment, where profit and loss are equivalent to changes in value, EaR and VaR should be the same.
