Moondog
Term

Stress Test

Also: scenario analysis

Estimating how a portfolio would behave under adverse market scenarios.

Stress tests model portfolio outcomes through historical or hypothetical shocks — a 2008-style crisis, a rate spike, an inflation regime. Moondog's deterministic engine runs these consistently, so results are reproducible and defensible.

A stress test answers the question a return forecast cannot: what happens in a bad year? For families with illiquid holdings or specific liabilities, knowing the portfolio can survive a 2008-style shock is often more reassuring, and more useful, than knowing its expected return.

Related terms

Alpha Return earned above what the market or a benchmark would explain. Alternative investments Assets beyond listed equities and bonds, such as private markets, real assets and hedge funds. Asset allocation How a portfolio is divided among asset classes such as equities, bonds and alternatives. Benchmark A reference index used to judge a portfolio's performance and risk. Beta A measure of how much an asset moves with the broader market. Capital market assumptions Forward-looking estimates of return, risk and correlation for each asset class.

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