Short Description: Stress Test Envelope measures the behavior of the portfolio under various shocks of an exogenous index.
When to use: This widget should be used to gauge the expected profit and loss (P&L) as well as low-probability / high-impact P&L, under various shocks of an index. It is a critical visualization to infer the various non-linearities and risks of correlation breakdown during extreme events.
Widget components: The x-axis represents the shock magnitudes and the y-axis represents portfolio profit and loss (P&L) as a percent of portfolio equity. Yellow is the expected PL and blue represents the "tail" PLs.