A financial analyst working at a commercial bank is evaluating the bank's approach to employing historical simulation (HS) for determining Value at Risk (VaR) and Expected Shortfall (ES). The analyst is specifically focused on the different strategies used for assigning weights to past return observations. These strategies include age-weighted methods, where more recent returns are given higher significance; volatility-weighted methods, where returns are weighted based on their volatility; correlation-weighted methods, where weights depend on the correlation of returns; and filtered HS methods, which involve adjusting weights based on various factors. Considering these weighting techniques, which of the following statements is correct? | Financial Risk Manager Part 2 Quiz