Drawdown

Drawdown refers to the peak-to-trough decline in the value of an investment or portfolio during a specific period. It measures how much an investment has fallen from its highest point before recovering or potentially dropping further. For example, if an investment reaches $10,000 and then drops to $7,000, the drawdown is $3,000 or 30%. It helps investors understand the risk and potential losses they might face during downturns, making it a key metric for assessing the resilience and volatility of investments.