Scenario & Stress Testing

Estimate potential gains or losses during specific market events, such as index drops or company moves. Assess individual asset performance during events and their contribution to overall portfolio results.

Application Overview

The Scenario and Stress Testing application within PRISM enables users to accurately estimate the potential gain or loss for their portfolios during specific market events. By selecting from a range of pre-configured events and simulating their impact, users can better understand the resilience of their portfolios and make more informed decisions about their investment strategies.

Application Features

| Pre-configured Market Events

Users can choose from a variety of pre-configured events, such as FTX collapse, Tesla Bitcoin purchase, or a 10% market index drop, to simulate potential scenarios. Custom events for simulation can be configured on demand.

| Portfolio Selection

The application allows users to select different portfolios for scenario analysis, offering a comprehensive understanding of potential risks and returns. The application displays both tabular and graphical representations of the results, offering users an intuitive understanding of the impact of market events on their portfolios.

| Gain/Loss Estimation

The application provides accurate estimations of the potential gain or loss during the selected market events, helping users assess the resilience of their portfolios.

| Individual Currency Performance

Users can see the performance of individual currencies in their portfolios during the selected events, as well as their contribution to the overall gain or loss.

Usage Examples

An investor is concerned about the potential impact of an FTX like collapse on their portfolio. They use the Scenario and Stress Testing application to simulate this event and evaluate the potential gains or losses associated with it.

A portfolio manager wants to assess the resilience of their clients' portfolios during various market events. They use the application to run stress tests on different portfolios and identify potential areas for improvement.

How-to Guide

Link to the Application - Stress Tests

1. Running a Portfolio Stress Test Access the PRISM platform and navigate to the Scenario and Stress Testing application. In the left panel, select the desired portfolio from the dropdown selector. Choose the pre-configured event you wish to simulate from the event dropdown selector.

2. Evaluating the Test Results Review the pre-event and post-event portfolio values displayed in the left panel. Examine the tabular output in the top right panel, which lists the individual currencies in the portfolio, along with their current and simulated prices, gain/loss in dollar and percentage terms, and gain/loss contribution

3. Estimate Impact by Portfolio Holdings Analyze the line charts in the bottom right panel to visualize the price movements of individual currencies during the selected event. Use the insights gained from the scenario and stress testing to inform your investment and risk management decisions.