Monte Carlo Simulation Calculator
Run Monte Carlo simulations to assess portfolio risk and return distributions for cryptocurrency investments
Monte Carlo Simulation Calculator
About This Calculator
The Monte Carlo Simulation Calculator uses random sampling to model the probability of different outcomes in a cryptocurrency portfolio. This statistical technique helps investors understand the range of possible returns and risks over time by simulating thousands of scenarios.
How It Works
- Input Parameters: Enter initial investment, expected annual return, volatility, time horizon, and number of simulations
- Geometric Brownian Motion: Each simulation path follows a random walk based on the lognormal distribution
- Run Simulations: Generate multiple portfolio paths using random normal variables
- Analyze Results: Calculate mean, standard deviation, and percentiles (VaR, confidence intervals)
Key Parameters
- Initial Investment: Starting portfolio value
- Expected Return (μ): Annualized expected return rate
- Volatility (σ): Annualized standard deviation of returns
- Time Horizon: Investment period in years
- Number of Simulations: Paths to run (higher = more accurate but slower)
Use Cases
- Assessing portfolio risk and potential returns
- Understanding Value at Risk (VaR) for crypto investments
- Stress testing investment strategies
- Comparing different asset allocations
- Educational tool for probabilistic thinking in trading