 # Value at risk (VAR) Calculator

The Value at Risk (VaR) Calculator can help you estimate how much of your investment you might lose at given normal market conditions, over a given period based on the probability of past performance. Stay on top of your exposure in five easy steps with our Value At Risk calculator.

• Enter a notional amount
• Assign an asset volatility percentage
• Choose a number of days
• Elect a confidence level
• Click Calculate!
Please enter a position amount between 0 and 50,000,000
Please enter a percentage between 0% and 100%
Please enter a number of days between 1 and 20000
Value at risk
0.1876

## What Is The Value At Risk Calculator?

Value at Risk (VAR) is a metric designed to quantify the maximum loss for an investment or trade over time. It is based on the variance-covariance method, also known as the parametric method.

Using normal distribution, periodic volatility, and a standard periodicity, the VAR furnishes the trader with a “disaster scenario” for an investment portfolio. ## How To Calculate Value At Risk (VAR)

Calculating VAR by hand is cumbersome and time-consuming. Our VAR calculator scrutinizes the formula below in seconds.

### Given portfolio value

Account base currency denomination (currency units)

### Expected volatility

Standard Deviation: Includes the variance-covariance method assuming a normal distribution in expected return

### Confidence level

Also called ‘periodic volatility’.

### Time horizon (days)

The square root of the given period over how many trading days are there in a year

### Value at risk

Future value of risk, informational purposes, estimate

* Results are theoretical, based on the normal distribution of assumed variables. Past performance is not indicative of future results.

The VAR Calculator is user-friendly. Simply enter the inputs, click Calculate and view how much of your portfolio value is at risk. A quick primer on the VAR parameters:

• Portfolio Value: The amount of currency being invested
• Expected Volatility: Market fluctuations in terms of standard deviation
• Confidence Interval: Variance of expectations (between 90.0% and 99.0%)
• Period: Investment horizon denominated in days ## FAQs

The Value at Risk concept can be difficult to grasp.
Here are some of the most frequently asked questions regarding the VaR calculation.

### What Is Normal Distribution?

The Oxford Dictionary defines normal distribution as “a function that represents the distribution of many random variables as a bell-shaped graph.” In VAR, it represents the probability distribution of incremental value loss. By doing so, a maximum negative expected return is derived.

### Can The VAR Calculator Project Future Portfolio Value?

No. VAR is used to estimate the worst-case scenario for investment under normal market conditions. It does not project an investment's growth or future value.

### Is Value At Risk Reliable?

Yes. Many market professionals incorporate VAR into their financial risk analysis. However, the parameters of the calculation are often based on either historical data or a historical method of defining volatility and confidence intervals. As with any tool, user discretion is advised.

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