Drawdown
Also called: fall from peak
The fall in value of an investment or index from its most recent peak, usually expressed as a percentage.
Drawdown = (peak value − current value) ÷ peak value × 100. It measures how much has been lost from the highest point.
Because gains are calculated on a smaller base after a fall, a drawdown needs a larger percentage gain to recover: 20% needs 25%, 50% needs 100%.
Example
A portfolio that peaked at ₹5,00,000 and is now worth ₹4,00,000 is in a 20% drawdown. It needs to gain 25% to get back to its peak.
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