Trump vs Clinton: Election Scenario Analysis

Months after the UK’s vote to leave the EU (Brexit), prices in risk assets are still swaying from one Article 50 headline to the next. In the US, November 8 presents a similar risk management challenge to market participants because of the outcome of the long-awaited and heavily-contested US Presidential Election.

Not unlike Brexit, the market has once again predicted one outcome as more likely than the alternative, the question of how markets might react, and the subsequent resulting price changes if the unlikely prevails. Below, we present an example of estimates, as we did for Brexit, for either outcome of the vote:

Probability (approx.) 0.8 0.2
Asset Class Clinton Wins Trump Wins
USDCHF 2% -4%
US Bond Prices -1% 2%
US Equities 1% -3%
Gold -1% 5%
Volatility -5% 20%

Please contact Consulting or your Imagine representative for help with constructing your own scenario analysis.
Disclaimer

The stresses described in this blog post illustrate one possible scenario and are intended to be used in general as guidance towards risk management of market events.

______
About the Author
David White worked as an equity trader and portfolio manager in derivatives for more than five years before joining Imagine’s London office as a Consultant in 2015. David’s roles are to advise and offer consulting services for systematic applications of risk management and derivatives pricing. David leads and is the project manager for EMEA client implementations. David holds a bachelor’s degree from Bournemouth University. He can be reached by email and phone: +44 (0) 7440 0743.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s