The Value at Risk (VaR) Calculator estimates the potential loss in your portfolio over a specific time period at various confidence levels. For example, a 95% daily VaR of $1,000 means there is only a 5% chance you will lose more than $1,000 in a day.
Professional Risk Metric
VaR is a standard risk metric used by professional fund managers and financial institutions. This tool helps you understand your portfolio's risk profile, stress test against various scenarios, and ensure you are not taking more risk than you can handle. It provides a single, easy-to-understand number that represents the "downside" of your investment strategy.
Time Horizons and Confidence
The tool allows you to calculate VaR across different time horizons (daily, weekly, monthly) and confidence intervals (95%, 99%). This gives you a comprehensive view of potential "bad days" versus "bad months," helping you size your positions to survive even significant market corrections.
Fat Tails in Crypto
While VaR is powerful, remember that crypto markets often exhibit "fat tails"—extreme events happen more frequently than standard models predict. Use the results of this calculator as a baseline, and always maintain a safety buffer for the truly unpredictable "black swan" events.