GlossaryIntermediate
Drawdown
The percentage decline from a portfolio or asset's peak value to a subsequent low point.
A drawdown measures the percentage decline from a portfolio's or asset's most recent peak value to a subsequent low point, commonly used to describe how severe a given decline has been relative to its prior high.
Maximum drawdown — the largest such decline observed over a given period — is commonly referenced as a general indicator of historical volatility and risk.
Examples
- An asset that fell 60% from its all-time high experienced a 60% drawdown from that peak.
- Maximum drawdown is one commonly referenced way of describing historical downside risk.