Portfolio Risk Analyzer

Portfolio Risk Analyzer

Complete investment portfolio risk management system. Analyze positions, calculate risk metrics, stress test scenarios, optimize allocations, and generate institutional-grade risk reports — all without external APIs.

1. Portfolio Intake

When the user shares their portfolio (positions, tickers, amounts), structure it into this format: portfolio: name: "User Portfolio" currency: USD as_of: "2026-02-15" positions: - ticker: AAPL shares: 50 avg_cost: 185.00 current_price: 228.50 # Look up via web search asset_class: US_EQUITY sector: Technology - ticker: BTC units: 0.5 avg_cost: 42000 current_price: 97500 asset_class: CRYPTO sector: Digital Assets - ticker: VOO shares: 100 avg_cost: 410.00 current_price: 535.00 asset_class: US_EQUITY_ETF sector: Broad Market cash: amount: 15000 currency: USD

Price Lookup

For each position, use web search to find current price: Search: [TICKER] stock price today For crypto: [COIN] price USD today Record source and timestamp

Portfolio Summary Table

PositionSharesCost BasisCurrent ValueWeightP&LP&L %AAPL50$9,250$11,42518.2%+$2,175+23.5%.....................TOTAL$XX,XXX$XX,XXX100%±$X,XXX±X.X%

2. Risk Metrics Calculator

Calculate ALL of the following for every portfolio analysis:

2.1 Concentration Risk

• Position Concentration:
• Any single position >20% of portfolio = HIGH RISK ⚠️
• Any single position >10% = MODERATE RISK
• Top 3 positions >50% = CONCENTRATED
• Sector Concentration:
• Any sector >30% = OVERWEIGHT
• Count unique sectors — fewer than 4 = UNDER-DIVERSIFIED
• Asset Class Breakdown:
• Equities: X%
• Fixed Income: X%
• Crypto: X%
• Cash: X%
• Alternatives: X%

2.2 Value at Risk (VaR) — Parametric Method

• Calculate the maximum expected loss at given confidence levels:
• Daily VaR Calculation:
• 1. Look up each position's historical volatility (annualized)
• - Use web search: "[TICKER] historical volatility 30 day"
• - Typical ranges: Large cap stocks 15-25%, Crypto 50-80%, Bonds 5-10%
• 2. Convert to daily volatility:
• Daily Vol = Annual Vol / √252
• 3. Position VaR (95% confidence):
• Position VaR = Position Value × Daily Vol × 1.645
• 4. Position VaR (99% confidence):
• Position VaR = Position Value × Daily Vol × 2.326
• 5. Portfolio VaR (simplified — assumes correlation ≈ 0.5 for stocks):
• Portfolio VaR ≈ √(Σ(Position VaR²) + 2×0.5×Σ(VaR_i × VaR_j))
• Report:
• 1-Day 95% VaR: $X,XXX (X.X% of portfolio)
• 1-Day 99% VaR: $X,XXX (X.X% of portfolio)
• 10-Day 95% VaR: $X,XXX (= 1-Day VaR × √10)
• Monthly 95% VaR: $X,XXX (= 1-Day VaR × √21)

2.3 Maximum Drawdown Estimation

• Based on asset class historical max drawdowns:
• US Large Cap: -50% (2008-09), typical correction -20%
• US Small Cap: -55%, typical correction -25%
• International Equity: -55%, typical -25%
• Emerging Markets: -65%, typical -30%
• Investment Grade Bonds: -15%, typical -5%
• High Yield Bonds: -30%, typical -10%
• REITs: -70%, typical -25%
• Crypto (BTC): -85%, typical -50%
• Gold: -45%, typical -15%
• Cash: 0%
• Portfolio Max Drawdown Estimate:
• = Σ(Position Weight × Asset Class Max Drawdown)
• Report:
• Estimated worst-case drawdown: -$XX,XXX (XX.X%)
• Estimated typical correction: -$XX,XXX (XX.X%)
• Recovery time estimate: X-X months (based on historical averages)

2.4 Beta & Market Sensitivity

• For each equity position:
• Look up beta via web search: "[TICKER] beta"
• Portfolio Beta = Σ(Position Weight × Position Beta)
• Interpretation:
• Beta > 1.2: Portfolio is AGGRESSIVE (amplifies market moves)
• Beta 0.8-1.2: Portfolio is NEUTRAL
• Beta < 0.8: Portfolio is DEFENSIVE
• Negative beta positions: HEDGE value
• Market Impact:
• If S&P 500 drops 10%, portfolio expected to move: Beta × -10%

2.5 Sharpe Ratio Estimation

• Portfolio Expected Return = Σ(Weight × Expected Return)
• Where Expected Return by asset class:
• US Large Cap: 8-10% annually
• US Small Cap: 9-11%
• International Developed: 6-8%
• Emerging Markets: 8-12%
• Investment Grade Bonds: 4-5%
• High Yield: 6-7%
• Crypto: highly variable (use 0% for conservative estimate)
• REITs: 7-9%
• Cash: current money market rate (~4.5%)
• Risk-Free Rate: current 3-month T-bill rate (search if needed)
• Sharpe Ratio = (Portfolio Expected Return - Risk-Free Rate) / Portfolio Volatility
• Rating:
• > 1.0: EXCELLENT risk-adjusted returns
• 0.5-1.0: GOOD
• 0-0.5: MEDIOCRE — consider rebalancing
• < 0: POOR — return doesn't justify risk

2.6 Income Analysis

• For dividend-paying positions:
• Look up dividend yield: "[TICKER] dividend yield"
• Annual Income = Shares × Annual Dividend per Share
• Portfolio Yield = Total Annual Dividends / Portfolio Value
• Report:
• Monthly estimated income: $XXX
• Annual estimated income: $X,XXX
• Yield on cost: X.X%
• Current yield: X.X%

3. Stress Testing

Run these scenarios against the portfolio and report impact:

3.1 Standard Scenarios

scenarios: market_crash_2008: name: "2008 Financial Crisis" impacts: US_EQUITY: -0.50 INTL_EQUITY: -0.55 EMERGING: -0.60 BONDS: +0.05 HIGH_YIELD: -0.30 REITS: -0.70 CRYPTO: -0.80 # projected based on risk profile GOLD: +0.10 CASH: 0 covid_crash_2020: name: "COVID-19 Crash (Feb-Mar 2020)" impacts: US_EQUITY: -0.34 INTL_EQUITY: -0.35 EMERGING: -0.35 BONDS: +0.03 HIGH_YIELD: -0.20 REITS: -0.40 CRYPTO: -0.50 GOLD: -0.05 CASH: 0 dot_com_2000: name: "Dot-Com Bust (2000-2002)" impacts: US_EQUITY: -0.45 TECH: -0.75 # Apply to technology sector specifically INTL_EQUITY: -0.40 BONDS: +0.15 CASH: 0 rate_hike_shock: name: "Rapid Rate Hike (+300bps)" impacts: US_EQUITY: -0.15 BONDS: -0.15 HIGH_YIELD: -0.10 REITS: -0.25 CRYPTO: -0.20 GOLD: -0.10 CASH: +0.01 # higher yields inflation_surge: name: "Stagflation (persistent 8%+ inflation)" impacts: US_EQUITY: -0.20 BONDS: -0.20 CRYPTO: -0.10 # debatable hedge GOLD: +0.15 REITS: -0.05 COMMODITIES: +0.20 CASH: -0.03 # real value erosion crypto_winter: name: "Crypto Winter (80% drawdown)" impacts: CRYPTO: -0.80 US_EQUITY: -0.05 # minor contagion

3.2 Stress Test Report Format

For each scenario: 📉 SCENARIO: [Name] | Position | Current Value | Stressed Value | Loss | |----------|--------------|----------------|------| | AAPL | $11,425 | $5,713 | -$5,712 | | ... | ... | ... | ... | | TOTAL | $XX,XXX | $XX,XXX | -$XX,XXX (-XX.X%) | Could you survive this? [YES/NO based on cash reserves and income needs] Recovery estimate: X-X months

3.3 Custom Scenario Builder

If user describes a specific worry, build a custom scenario: User: "What if tech crashes 40% but bonds rally?" → Build custom impact map, apply to portfolio, report results

4.1 Current Allocation Assessment

Compare current allocation to standard models: AGGRESSIVE (Age <35, high risk tolerance): Equities: 80-90%, Bonds: 5-10%, Alternatives: 5-10%, Cash: 2-5% GROWTH (Age 35-50): Equities: 60-75%, Bonds: 15-25%, Alternatives: 5-10%, Cash: 5% BALANCED (Age 50-60): Equities: 40-60%, Bonds: 30-40%, Alternatives: 5-10%, Cash: 5-10% CONSERVATIVE (Age 60+, income focus): Equities: 20-40%, Bonds: 40-50%, Alternatives: 5%, Cash: 10-20% Current allocation matches: [MODEL] profile Recommended adjustments: [specific moves]

4.2 Risk Parity Analysis

Risk Parity Target: Each asset class contributes EQUAL risk to portfolio Steps: 1. Calculate each position's risk contribution: Risk Contribution = Weight × Volatility × Correlation_with_portfolio 2. For equal risk contribution: Target Weight_i = (1/Vol_i) / Σ(1/Vol_j) 3. Report: Current vs Risk-Parity weights Trades needed to rebalance Expected impact on Sharpe Ratio

4.3 Rebalancing Recommendations

• Check rebalancing triggers:
• Any position drifted >5% from target? → REBALANCE
• Any asset class drifted >10% from target? → REBALANCE
• Last rebalance >6 months ago? → REVIEW
• Rebalancing Method:
• 1. Calculate target weights
• 2. Calculate current weights
• 3. Determine trades needed (minimize transactions)
• 4. Tax-lot optimization: sell highest-cost lots first (minimize tax)
• 5. Consider wash sale rules if harvesting losses
• Output trade list:
• | Action | Ticker | Shares | Est. Value | Reason |
• |--------|--------|--------|-----------|--------|
• | SELL | AAPL | 15 | $3,428 | Overweight tech |
• | BUY | BND | 25 | $1,850 | Underweight bonds |

4.4 Correlation Analysis

• Assess diversification quality:
• HIGH correlation pairs (>0.7) — these DON'T diversify each other:
• Tech stocks with each other
• US equity ETFs with each other
• High yield bonds with equities
• LOW correlation pairs (<0.3) — TRUE diversifiers:
• Stocks vs Treasury bonds
• US vs Gold
• Equities vs Managed Futures
• NEGATIVE correlation — HEDGES:
• Long equity + Put options
• Stocks + VIX products
• Growth + Value in some regimes
• Grade portfolio diversification: A/B/C/D/F

5. Risk Score Card (0-100)

Generate a single risk score: risk_scorecard: concentration_risk: weight: 20 score: X # 100 = well diversified, 0 = single stock details: "Top position is X%, X sectors represented" volatility_risk: weight: 20 score: X # 100 = low vol, 0 = extremely volatile details: "Portfolio annualized vol: X%" drawdown_risk: weight: 20 score: X # 100 = minimal drawdown exposure, 0 = could lose 50%+ details: "Max estimated drawdown: X%" liquidity_risk: weight: 15 score: X # 100 = all highly liquid, 0 = illiquid positions details: "X% in liquid large-cap, X% in illiquid" income_resilience: weight: 10 score: X # 100 = strong income, 0 = no yield details: "Portfolio yield: X%, X% from reliable dividend payers" market_sensitivity: weight: 15 score: X # 100 = low beta/defensive, 0 = highly aggressive details: "Portfolio beta: X.XX" overall_score: X/100 rating: "[CONSERVATIVE|MODERATE|AGGRESSIVE|SPECULATIVE]" recommendation: "[Key action item]"

Score Interpretation

80-100: FORTRESS — Well-protected, may be too conservative for growth 60-79: SOLID — Good risk management, minor improvements possible 40-59: MODERATE — Reasonable but has notable risk exposures 20-39: ELEVATED — Significant vulnerabilities, rebalancing recommended 0-19: DANGER ZONE — Extreme concentration or volatility, urgent action needed

Daily Check Template (for cron/heartbeat use)

• For each portfolio position:
• 1. Check price vs previous close (web search)
• 2. Flag if any position moved >3% in a day
• 3. Flag if any position hit stop-loss level
• 4. Check for earnings/events in next 7 days
• Alert Thresholds:
• Single position -5% in a day → ALERT
• Portfolio -3% in a day → ALERT
• Position hits 52-week low → WATCH
• VIX > 25 → ELEVATED CAUTION
• VIX > 35 → HIGH ALERT — review hedges

Weekly Review Template

• ## Portfolio Weekly Review — [Date]
• ### Performance
• Portfolio value: $XX,XXX (±X.X% week)
• Best performer: [TICKER] +X.X%
• Worst performer: [TICKER] -X.X%
• vs S&P 500: [outperformed/underperformed] by X.X%
• ### Risk Changes
• VaR change: $X,XXX → $X,XXX
• Any new concentration issues? [Y/N]
• Rebalancing needed? [Y/N]
• ### Upcoming Events
• Earnings: [tickers and dates]
• Ex-dividend dates: [tickers and dates]
• Fed/macro events: [list]
• ### Action Items
• 1. [Specific recommendation]
• 2. [Specific recommendation]

7. Tax-Loss Harvesting Scanner

For each position with unrealized losses: 1. Calculate unrealized loss: (Current Price - Avg Cost) × Shares 2. Check if loss >$500 (worth harvesting) 3. Identify tax-efficient replacement: - Same sector ETF (avoids wash sale) - Similar factor exposure - Hold replacement 31+ days before switching back Report: | Ticker | Unrealized Loss | Replacement | Wash Sale Clear Date | |--------|----------------|-------------|---------------------| | XYZ | -$2,500 | Similar ETF | [date + 31 days] | Estimated tax savings: $X,XXX (at X% marginal rate)

Crypto Portfolio Risk

Additional crypto-specific metrics: Bitcoin dominance correlation Exchange risk (centralized vs self-custody) Protocol risk for DeFi positions Stablecoin exposure and depeg risk Tax implications of staking/yield

Real Estate (REITs/Property)

FFO yield vs dividend yield Interest rate sensitivity Geographic concentration Property type diversification (residential/commercial/industrial)

Options Positions

If portfolio includes options: Delta exposure (equivalent stock position) Theta decay (daily time value loss) Implied volatility vs historical Max loss calculation Breakeven prices

Full Risk Report (on request)

Generate a complete PDF-ready markdown report: # Portfolio Risk Report ## Prepared: [Date] ## Portfolio: [Name] ### Executive Summary [2-3 sentence overview: total value, risk rating, top recommendation] ### 1. Holdings Summary [Position table from Section 1] ### 2. Risk Metrics [All calculations from Section 2] ### 3. Stress Test Results [All scenarios from Section 3] ### 4. Optimization Recommendations [From Section 4] ### 5. Risk Scorecard [From Section 5] ### 6. Action Plan [Prioritized list of recommended changes] ### Disclaimer This analysis is for informational purposes only and does not constitute financial advice. Past performance and historical data do not guarantee future results. Consult a qualified financial advisor before making investment decisions.

10. Quick Commands

Respond to these natural language requests: User SaysAction"Analyze my portfolio"Full Section 1-5 analysis"What's my risk?"Risk Scorecard (Section 5)"Stress test my portfolio"All scenarios (Section 3)"What if the market crashes?"2008 + COVID scenarios"How should I rebalance?"Section 4 optimization"Tax loss harvest"Section 7 scanner"Weekly review"Section 6 weekly template"Add [position]"Update portfolio YAML, recalculate"Remove [position]"Update portfolio YAML, recalculate"What's my VaR?"Value at Risk calculation (Section 2.2)"Compare to S&P 500"Benchmark comparison"How diversified am I?"Concentration + correlation analysis"What's my Sharpe ratio?"Section 2.5"Set alert for [ticker] at [price]"Add to monitoring (Section 6)

Small Portfolios (<$10K)

Skip VaR (not meaningful for small amounts) Focus on concentration risk and savings rate Recommend index-first approach

Single Stock Portfolios (e.g., company RSUs)

ALWAYS flag extreme concentration risk Model collar strategies (protective put + covered call) 10b5-1 plan reminder for insiders Calculate how much to diversify per quarter

Crypto-Heavy (>50% crypto)

Apply crypto winter scenario prominently Flag exchange counterparty risk Recommend cold storage percentage Note tax complexity of DeFi/staking

International Portfolios

Currency risk calculation Country risk premium Withholding tax impact on dividends ADR vs local share considerations

Leveraged Positions (margin/options)

Calculate margin call price Stress test at 2x normal drawdown Flag if margin utilization >50% Model forced liquidation scenarios

Retirement Accounts (IRA/401k)

Different tax treatment (no tax-loss harvesting needed) RMD impact for traditional IRA Roth conversion opportunity analysis Sequence of returns risk for near-retirees