Leveraged Asset Class

Backtest Simulation

Backtesting Asset Classes with Custom Inputs

One of the most powerful features of our web app is its ability to allow users to simulate investment performance by adjusting several parameters. Users can choose a date range for historical data, set an initial investment amount, and apply leverage, offering a flexible way to see how different strategies would have performed over time.

  • Leverage: The default leverage setting is 1, meaning the investment moves directly in line with the asset’s price changes. However, users can increase the leverage—for example, setting it to 2 will amplify returns and losses. If an asset rises by 2% in a single day, a leverage of 2 would cause it to increase the return to 4%. Conversely, if the asset declines by 2%, the loss would be magnified to 4% in a single day. 
  • Asset Classes: You offer a variety of asset classes for backtesting, including equities like the S&P 500 and NASDAQ, precious metals such as gold and silver, U.S. Treasury bonds (intermediate and long-term), and even cash. This variety allows users to simulate a wide range of portfolio allocations and examine how different asset classes perform under various market conditions.

Indicator-Based Simulation for Single Asset Classes

Second graph allows for indicator-based simulations. Users can select one asset class and apply key economic indicators like the yield curve inversion, credit spread, VIX, and near-term forward spread to visualize how these variables impact performance.

  • Conditional Coloring: If indicators signal market stress, such as an inverted yield curve, credit spreads over 1%, or VIX exceeding 30, the graph line changes to red, indicating caution. When these stress indicators are absent, the line appears green, showing more favorable conditions for that asset.

This type of analysis provides users with a dynamic view of how assets perform during times of economic uncertainty versus stability. It’s particularly useful for identifying periods where risk management may be necessary or where opportunities for higher returns may exist due to market dislocations.