Stress testing is a computer simulation technique used to test the resilience of an investment portfolio against possible future financial situations. By simulating a drop in the market, you can see by how much your portfolio may lose value.  You can also take the beta of securities in your portfolio into account, to provide a potentially more accurate picture of how your portfolio may react to the change in the market.


    1. To stress a portfolio, check the Stress toolbar check box.



    2. The Stress Portfolio window appears.



      • Move the slider to select the percentage by which to stress the portfolio.  To simulate a market drop, move the slider to the left.  To simulate a market rise, move the slider to the right.  To clear the existing stress, click Clear.

      • To provide a potentially more accurate picture of how the portfolio will react, check the box Use beta to compute stressed prices.  Beta is a measure of a stock's volatility in relation to the overall market. By definition, the market, such as the S&P 500 Index, has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market.  When you check this box, TakeStock 2 will use each security's beta to compute the effect of the stress on that security.

      • To automatically switch to the "Current market value (stressed)" view after stressing the portfolio, check the box Automatically switch to stressed positions view.

      • Click OK to apply the selected stress.

    1. The portfolio reflects the applied stress.


      • Click the stress value text "-15% (β used)" to change the amount of stress you want to apply.

      • Check the Stress box to alternate between a stressed and unstressed view of the portfolio.


Created with the Personal Edition of HelpNDoc: Easily create Help documents