About Prompt
- Prompt Type – Dynamic
- Prompt Platform – ChatGPT, Grok, Deepseek, Gemini, Copilot, Midjourney, Meta AI and more
- Niche – Stress Testing Portfolios
- Language – English
- Category – Financial Simulation
- Prompt Title – AI Prompt for Scenario Analysis of Financial Portfolios Under Different Market Conditions
Prompt Details
**Goal:** To perform a comprehensive stress test and scenario analysis of a financial portfolio under various market conditions, enabling robust risk assessment and informed decision-making.
**Prompt Type:** Dynamic (adaptable to different portfolios and market scenarios)
**Target AI Platform:** All (designed for maximum compatibility)
**Input Parameters:**
* **Portfolio Composition:** Detailed breakdown of the portfolio, including:
* Asset Class (e.g., equities, bonds, commodities, real estate, derivatives)
* Individual Holdings (e.g., specific stock tickers, bond identifiers, property details)
* Quantity/Weighting of each holding
* Historical Performance Data (e.g., daily returns for at least the past 5 years)
* **Market Scenarios:** A list of scenarios to be analyzed. This can include both pre-defined scenarios and user-specified custom scenarios. Examples of pre-defined scenarios:
* **Global Recession:** Specify parameters like GDP contraction, unemployment rate increase, market volatility, and interest rate changes.
* **Inflationary Shock:** Define parameters like inflation rate increase, impact on various asset classes, and interest rate responses.
* **Geopolitical Crisis:** Describe the nature of the crisis, impacted regions/sectors, potential market reactions, and potential policy responses.
* **Interest Rate Hike/Cut:** Specify the magnitude and speed of interest rate changes and their anticipated impact on different asset classes.
* **Custom Scenarios:** Allow users to define their own scenarios by specifying changes to various market factors, including:
* Interest rates (short-term, long-term)
* Inflation rates
* GDP growth rates
* Exchange rates
* Commodity prices
* Equity market indices (e.g., S&P 500, Dow Jones, Nasdaq)
* Bond yields (various maturities)
* Volatility indices (e.g., VIX)
* Credit spreads
* **Time Horizon:** The period over which the stress test should be conducted (e.g., 1 month, 3 months, 1 year, 5 years).
* **Metrics:** Specify the key metrics to be calculated for each scenario, including:
* Portfolio Value (end of period)
* Portfolio Return (absolute and percentage)
* Maximum Drawdown
* Value at Risk (VaR) at different confidence levels (e.g., 95%, 99%)
* Conditional Value at Risk (CVaR) / Expected Shortfall (ES)
* Sharpe Ratio
* Sortino Ratio
* Other relevant risk and performance measures
**Output:**
* **Scenario Analysis Report:** A comprehensive report detailing the impact of each scenario on the portfolio. This should include:
* Summary Table: Presenting key metrics for each scenario alongside the baseline (current market conditions).
* Scenario-Specific Analysis: Detailed breakdown of the impact of each scenario on individual holdings and asset classes within the portfolio.
* Charts and Graphs: Visualizations of portfolio performance under different scenarios, including historical data and projected performance.
* Sensitivity Analysis: Identification of the most influential market factors driving portfolio performance under each scenario. This can be accomplished by systematically varying input parameters and observing the impact on portfolio metrics.
* Key Risk Drivers: Highlighting the specific risks that pose the greatest threat to the portfolio under different market conditions.
**Prompt Structure (Example):**
“Analyze the performance of the following portfolio [Insert Portfolio Composition] under the following market scenarios: [List Market Scenarios and parameters for each]. Consider a time horizon of [Time Horizon] and calculate the following metrics: [List Metrics]. Provide a detailed report including a summary table, scenario-specific analysis, charts/graphs, sensitivity analysis insights, and identification of key risk drivers.”
**Instructions for Dynamic Adaptation:**
* **Replace bracketed placeholders:** Fill in the specific portfolio details, scenarios, time horizon, and desired metrics as required.
* **Adjust scenario parameters:** Modify the pre-defined scenarios or create entirely new custom scenarios based on the specific needs of the analysis.
* **Refine metric selection:** Choose the most relevant metrics based on the investment objectives and risk tolerance.
This detailed prompt allows for flexible and dynamic scenario analysis across various portfolios and market conditions, enabling users to conduct robust stress tests and make data-driven investment decisions. The focus on clear input parameters, specific output requirements, and adaptability makes this prompt suitable for a wide range of AI platforms.