Stock Forecast & Stress Test Tool

Build a simple three-asset portfolio, then explore historical-style volatility simulations, drawdown patterns, crash stress tests, portfolio variance and correlation effects, and forward projections using Monte Carlo paths.

Educational only · Not investment advice or a prediction engine

Starting portfolio value ($)

Total value for all assets combined at time 0.

Projection horizon (years)

Used for forward simulations and drawdown paths.

Assets & weights

Provide expected annual return and volatility for up to three assets. Weights will be normalized so they sum to 100%.

Asset A weight (%) Asset A expected return (%/yr) Asset A volatility (%/yr)

Asset B weight (%) Asset B expected return (%/yr) Asset B volatility (%/yr)

Asset C weight (%) Asset C expected return (%/yr) Asset C volatility (%/yr)

Crash scenario

Used in the portfolio crash stress test with diversification adjustment.

Pairwise correlations (–1.0 to +1.0)

Corr(A, B)

Corr(A, C)

Corr(B, C)

1.0 = move together, 0.0 = independent, negative = tend to move opposite.

Portfolio variance & volatility

Normalized weights

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Expected annual return

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Portfolio volatility (σ)

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1-year 1σ band

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Portfolio variance uses a 3×3 correlation matrix with your volatilities and weights: σ² = wᵀΣw, where Σ is built from volatilities and correlations.

Market crash stress test

Crash scenario

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Avg. pairwise correlation

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Estimated portfolio drop

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Portfolio value after crash

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Crash impact is scaled by diversification: highly correlated assets fall closer to the market crash, while low-correlation mixes are cushioned.

Simulated volatility, drawdowns & forward projections

Using your portfolio’s aggregate expected return and volatility, the tool runs a simplified Monte Carlo engine with monthly steps. This approximates a historical-style volatility pattern, calculates max drawdown, and estimates a forward distribution of outcomes at the end of the horizon.

Historical-style path (single simulation)

Max drawdown over horizon

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Ending value (single path)

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Max drawdown is the largest peak-to-trough decline in the simulated path, expressed as a percentage.

Forward projection engine (Monte Carlo)

Median ending value

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10th percentile (bearish)

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90th percentile (bullish)

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Approx. chance of finishing below start

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Monte Carlo uses normally distributed monthly returns with your portfolio’s annualized return and volatility. Real markets include fat tails, regime shifts, and black swans that this model cannot capture.

Correlation matrix

These are the correlations you entered between assets A, B, and C. Together with volatility inputs, they drive the portfolio variance and diversification effect in the crash stress test.

	A	B	C
A	1.00	0.60	0.30
B	0.60	1.00	0.20
C	0.30	0.20	1.00

Correlations are symmetric with 1.00 on the diagonal by definition. Values outside the –1.0 to +1.0 range are automatically clipped for stability.

Important disclaimer

This tool is a simplified educational sandbox. It does not download real market data, does not know anything about specific securities, and does not provide financial advice, recommendations, or predictions. All outputs are based solely on the assumptions you enter.

Investing involves risk, including the possible loss of principal. Always do your own research or consult a qualified professional before making real investment decisions.