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Factor Push
Definition
A quantitative stress test that pushes certain variables a.k.a "factors" (such as price, growth rate or interest rates) in a model to their estimated negative extremes, such as a 5 or 6 standard deviation event in order to estimate the impact on the portfolio's value.
Using the term Factor Push :
The institutional portfolio manager asked his quantitative analyst on his desk to perform a factor push on all primary factors in their equity forecast model.
Pay Special Attention To :
A factor push is part of an overall stress test model, but they are not infallible by any means. More often than not, things do not unfold in the real world in the same way that a linear quantitative model would have you believe. Therefore, a factor push might have you believe that you are well covered and understand your risks, when you may still have significan vulnerability.
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Related terms
Quantitative Analysis , Stress Test
