Trump vs Clinton: Election Scenario Analysis
Months after the UK’s vote to leave the EU (Brexit), prices in risk assets are still swaying from one Article 50 headline to the next. In the US, November 8 presents a similar risk management challenge to market participants because of the outcome of the long-awaited and heavily-contested US Presidential Election.
Not unlike Brexit, the market has once again predicted one outcome as more likely than the alternative, the question of how markets might react, and the subsequent resulting price changes if the unlikely prevails. Below, we present an example of estimates, as we did for Brexit, for either outcome of the vote:
|Asset Class||Clinton Wins||Trump Wins|
|US Bond Prices||-1%||2%|
Please contact Consulting or your TS Imagine representative for help with constructing your own scenario analysis.
The stresses described in this blog post illustrate one possible scenario and are intended to be used in general as guidance towards risk management of market events.
Historical VaR (HVaR) has become a standard measurement of risk. Many firms now require a full twelve years of prices (plus data from further back such as the Great Recession of 2008–2009). However, this requirement introduces a conundrum: what do we do when a company has not been around for a full twelve years?
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HVaR, By Dr Lance Smith, Chief Strategy Officer, TS Imagine Historical VaR (HVaR) has become a standard measurement of risk, in which a current portfolio is subjected to the market conditions of a prior day and the resulting P&L is recorded. Read entire article here.