Reviewed by CalcFi Editorial · Verified against SEC asset allocation guide + parametric VaR (RiskMetrics)
Reviewed by CalcFi Editorial · Verified against SEC asset allocation guide + parametric VaR (RiskMetrics)
Estimate single-stock Value-at-Risk and recommended diversification target.
Auto-updated · Verified daily against IRS, Fed & Treasury sources
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Investable assets — exclude primary home
RSU + ESPP + options vested in employer
Big tech ~25-35%, small-cap ~50%+
Sum of acquisition prices
Based on your inputs
Position: $405,000
In a typical bad year (1 in 20), this position could drop more than $233,179. That's 0.6% of the position.
Target: 25% ($225,000)
You're $180,000 over the 25% single-stock guideline. Consider a staged exit plan or 10b5-1 schedule to reduce concentration without timing the market.
| Position Value | $405,000 |
|---|---|
| % of Net Worth | 45% |
| 1-Month VaR | $67,313 |
| 1-Year VaR | $233,179 |
| Diversification Target (25%) | $225,000 |
| Excess Above Target | $180,000 |
| Underwater vs Cost Basis | No |
Educational only. Not financial advice. Tax laws change — verify with a CPA before exercising large positions. Sources: SEC Beginners Guide to Asset Allocation, IRS Pub 550 (capital gains/losses), parametric VaR per RiskMetrics methodology.
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Holding employer stock means doubling down on the company that already pays your salary. If the company struggles, you lose income AND wealth at the same moment. Diversification is the only free lunch in finance — declining it for any reason other than restricted-share rules is a choice with measurable cost.
Value-at-Risk is "how bad can a normal-ish bad month be." A 95% 1-month VaR of $80k means: in 19 of 20 months, losses stay under $80k; in the worst 1 of 20, they go higher. It does NOT cap downside — it sets a "this should be uncommon" threshold.
Common educational frameworks: sell-at-vest (treat RSU vest as cash bonus), staged exit (sell X% per quarter for 4-8 quarters), 10b5-1 plan (auto-sell on schedule, immune to insider blackouts). Tax: long-term holds get LTCG rates, short-term sells = ordinary income. Discuss with a CPA.
Parametric (variance-covariance) VaR: Position × σ × √horizon × z-score. Assumes returns roughly normal — real fat-tailed distributions can produce worse drawdowns. Educational estimate only.
Conventional wisdom: under 10% non-employee, under 25% with employee complications (vesting + insider blackouts limit exit speed). Personal tolerance + alternatives matter.
If a position is below cost basis, selling realizes a capital loss usable against gains + up to $3k of ordinary income/yr (excess carries forward). Wash-sale rule: no rebuy within 30 days.
Annualized std-dev of daily returns. Big-cap tech: ~25-35%. Small-cap or pre-revenue: 50-80%+. Crypto-adjacent: 80-150%+. Use historical from Yahoo Finance "1Y" view.
Parametric VaR = Position × σ × √horizon × z
σ = annualized return std-dev. z = 1.645 (95%) or 2.326 (99%). 1-month σ = annual σ ÷ √12.
Diversification target: 10% (non-employee) or 25% (employee w/ vesting constraints) of net worth in any one stock.
Assumes ~normal returns. Real distributions are fat-tailed; actual worst-case can exceed VaR. Educational only.
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.