Investment Drawdown Calculator
Accurately model potential losses and recovery periods for stocks, ETFs, or entire portfolios using historical data.
What Is an Investment Drawdown?
A drawdown measures the decline from a historical peak in investment value (like a stock price or portfolio balance) to its lowest point before a new peak is achieved.
Understanding drawdowns is crucial because it helps quantify the potential downside risk of an investment. It answers the question: "If I invested at the absolute worst time (the peak), how much could I have lost before it started recovering?" This helps investors align strategies with their risk tolerance and prepare psychologically for potential losses.
For example, during the 2008 Global Financial Crisis, the S&P 500 experienced a drawdown of over 50% from its 2007 peak. Use the calculator below with 'SPY' to see this.
Why Use This Investment Drawdown Calculator?
Custom Date Range
Analyze investment drawdowns over any historical period you choose, from weeks to decades.
Stock & ETF Support
Enter a single stock ticker (e.g., AAPL) or ETF (e.g., SPY). (Portfolio support coming soon!)
Visual Charts & Tables
Instantly visualize price history, drawdown periods, and key statistics with clear charts and tables.
How the Drawdown Calculator Works
- Fetch Price Data: Retrieves historical price data for your chosen ticker between the selected start and end dates at the specified frequency (daily, weekly, or monthly). Option to include reinvested dividends (Total Return). (Note: Currently uses simulated data. Replace `fetchPriceData` with your actual API call).
- Compute Running Peak: Iterates through the price data, keeping track of the highest price reached so far (the running peak).
- Calculate Drawdown %: At each data point, calculates the percentage difference between the current price and the running peak: `(Current Price - Running Peak) / Running Peak`.
- Identify Max Drawdown & Duration: Records the most negative percentage calculated (maximum drawdown), the date of the preceding peak, and the date the lowest point (trough) was reached. Duration is the time between that specific peak and trough.
- Estimate Recovery Time: Finds the first date *after* the trough of the maximum drawdown when the price returns to or exceeds the level of the preceding peak. Recovery time is the total duration from the peak date to this recovery date.
- Identify Top Episodes: Separately tracks all significant peak-to-recovery cycles to list the largest drawdown episodes within the period.
Use the Investment Drawdown Calculator
Investment Drawdown Analysis: Case Studies
S&P 500 (SPY) during 2007–2009 GFC
The Global Financial Crisis led to a max drawdown exceeding 50% for the S&P 500. Recovery took several years. Input SPY with dates like 2007-10-01 to 2013-03-31 to see the calculation.
NASDAQ (QQQ) during 2022 Correction
Tech-heavy indices like the NASDAQ 100 saw significant drawdowns (around 30%+) in 2022 as interest rates rose. Input QQQ with dates like 2021-11-01 to 2023-12-31 to analyze this period.
Use the calculator above with relevant tickers and dates to explore these scenarios yourself. (Remember: Data is currently simulated).
Investment Drawdown FAQs
What's the difference between drawdown and volatility?▼
Volatility (like standard deviation) measures the dispersion of returns around the average, indicating how much an investment's price fluctuates day-to-day. Drawdown specifically measures the peak-to-trough decline, focusing on the extent of losses from a high point. An asset can be volatile without having large drawdowns, or vice-versa.
Can I include dividends in the calculation?▼
Yes, the 'Reinvest Dividends' option adjusts the historical price data to reflect total return (price appreciation + dividends reinvested). This typically results in smaller drawdowns compared to price return only, as dividends cushion losses and accelerate recovery.
How accurate is the historical price data?▼
The accuracy depends on the data provider (e.g., Yahoo Finance, Alpha Vantage). Generally, data for major indices and stocks is highly accurate, but there can be occasional discrepancies or adjustments (e.g., stock splits). We strive to use reliable sources, but cannot guarantee perfection. The data here is currently simulated.
Why does recovery time vary by data frequency (daily, weekly)?▼
Using lower frequency data (weekly, monthly) smooths out price fluctuations. This can make drawdowns appear shallower and shorter, and recovery might seem faster because intra-week/month lows and peaks are missed. Daily data provides the most granular view of drawdowns and recovery periods.