Historical Simulation

Historical Simulation is a method used to assess potential future outcomes by analyzing past data. It involves looking at historical events, trends, or performance metrics to understand how a particular system or investment might behave under similar conditions in the future. By applying historical scenarios to current portfolios or situations, analysts can estimate risks and returns without relying on theoretical models. This approach helps businesses and investors make informed decisions based on real-world evidence and patterns observed over time. Essentially, it provides a way to learn from history to navigate future uncertainties.