Last updated on September 16th, 2022 at 08:21 am
Here's how to perform scenario analysis of a financial portfolio with Python
The finance sector is constantly trying to predict future scenarios to make impactful and positive decisions. Scenario analysis can help generate important insights from financial portfolios that allow professionals to understand future conditions and what might affect or cause them. As a chartered financial analyst, you will be able to implement Python packages and simulate scenarios.
To acquire the necessary skills, you can enroll in a financial analysis course. Imarticus Learning offers a Financial Analysis program to students who are interested in the finance industry.
Completing Scenario Analysis of Financial Portfolio with Python
If you learn financial analysis, you will undertake the scenario analysis process for financial portfolios using Python. While performing scenario analysis with Python, you will have to implement the Monte Carlo simulation.
When you start scenario analysis of a financial portfolio, you will need to collect all relevant data. You can install a data library like yfinance and download the necessary information on stock prices. Now, once you have that, you will have to find out the daily close price of each stock. To do this, you need to calculate the price "p" from a specific day "t" till the day "t+1". You can use the pct_change method when you have Python and quickly get the formula for this calculation. You will then need to understand the composition of the portfolio and the loop that will provide the daily stock returns and fill the Pandas Data Frame.
Once you have the returns, you can begin the Monte Carlo simulation of a single stock. A financial analyst course online with an updated and holistic approach to financial studies will help you apply this simulation. Suppose you want to simulate "x" days, then you need to find stock and obtain the returns time series of that stock. Make sure that you have the original returns time series. Then, you need to randomly but uniformly select "x" values with replacement. You can then complete the simulation with a single line of code.
When you need to perform a scenario analysis of a financial portfolio, you will need to get the returns and weights of each stock in the portfolio. Using these, you have to find the weighted sum of all the stock returns. You can use a returns data frame to calculate and then perform the simulation.
Gain Industry Certification in Financial Analysis
Financial institutions need to have a fair idea of what to expect in the future as the industry functions on accurate analysis and predictions. To learn financial analysis and perform scenario analysis, you will need to have industry-oriented training. Imarticus Learning's Financial Analysis Prodegree is a great place to start. The course is ideal for freshers and working professionals who are looking to change careers and enter the financial industry. The Financial Analysis Prodegree course from Imarticus Learning is in collaboration with KPMG.
Therefore, as a student, you will have access to the best industry training to prepare you for the finance sector. You will also get to know the current situations and develop job-related skills that will make you a valuable employee in the future. Since the curriculum is designed for students to launch successful careers, it includes several interesting and relevant topics. You will learn financial analysis, modeling, equity research, financial statement analysis, valuation, and transaction execution. You will become a chartered financial analyst and can explore numerous careers in the finance industry.
After completing the financial analyst course online, you can go into private equity, investment banking, or corporate finance. Imarticus Learning offers essential toolkits that help students develop skills and experience to work in the industry.
