Getting Started

Adaptive does not retain any account information, all sensitive information is passed to our Treasury service, Modern Treasury, and discarded. Adaptive only keeps the nickname for internal use.

The balance of your client wallet account is shown in the top-right corner of most screens when you are logged in to Adaptive, under the heading “Wallet Balance”. See also:

• “How do I deposit funds into my Adaptive client wallet account, and also make withdrawals?”
• “How do I receive Shield payouts?”

Payouts due under Shield guarantee agreements are deposited to the client wallet account. Payouts will appear in your client wallet the next business day following the settlement date of the guarantee agreement. You can use the funds to buy another Shield or withdraw them to a verified external account through wire transfer or ACH. (See also “How do I deposit funds into my Adaptive client wallet account, and also make withdrawals?”)

Have you already created a client wallet account? If not, see: You will be able to transfer funds to and from your Adaptive client wallet account with your verified external account. Important: All customer wallet accounts are held safely and securely at Chase bank in a segregated customer money account. Go to your user profile and select the "Deposit/Withdraw funds" screen. Use the routing number and virtual account number for your wallet to transfer funds through wire transfer or ACH. Note: Transfer of funds typically takes 24 hours to complete. Once you have funds in the wallet, you can buy a Shield up to the amount you have available.

Set up the account by following these steps:

1. Add Payment Instruction– go to the “Payment Instructions” screen from your client profile and click "Add new account." Provide the account name, number, routing number, and a nickname. Once a payment instruction has been created, a unique virtual account will be assigned to you.;
2. Verify an External Account for Fund Transfers Having completed Step 1—including the creation of a unique virtual account number by Adaptive—you will be asked to verify your external account information. Adaptive uses a micro deposit method for verification. Two small deposits from Adaptive will be sent to the client's account, usually within one or two business days, and then withdrawn. Enter the deposit amounts in any order on the “Payment Instructions” screen within five days to verify the external account.;
3. Deposit Funds – see “How do I deposit funds into my client wallet account?”;

Need help? Contact support@adaptive-investments.com.

Yes, though it requires a pilot account with customization and account-linking features not included in this public Adaptive’s Portfolio Protection Calculator tool. Request an Adaptive demo or pilot account to test drive our breakthrough fintech technology. Pilot users can securely link brokerage accounts for automated risk analysis and downside protection pricing.

Downside protection, often called a portfolio hedge, is a general term for investments and other agreements which pay off in market and portfolio declines. Common forms include ‘put options’ and futures contracts which require special expertise and trading permissions. Downside protection can limit potential losses, thus reducing the overall risk of a portfolio even while staying invested for potential growth. The cost of downside protection is a drag on a portfolio’s performance, compared to an unprotected portfolio. At the same time downside protection can sometimes lead to improved risk-adjusted returns as compared to buy-and-hold without protection, if protection proceeds are reinvested at lower prices in a portfolio which is growing over the long term. The Portfolio Protection Calculator programmatically generates a list of possible put option contracts with strike price and expiration based on the selection of Protection Level and Protection Period. This is NOT investment advice. Consult a licensed broker for options trading information and approvals.

The Projected Risk in Adaptive’s Portfolio Protection Calculator is a powerful tool to measure how downside protection can ‘dial down’ the risk of losses in a portfolio, even while staying in the market for expected growth over the long-term. Projected Risk compares the observed downside volatility of three different portfolios, based on the selected Model Portfolio:

• Market Risk. Measure of the observed downside volatility of the S&P 500 index. It is in effect a portfolio made up entirely of the S&P 500. Read more about the S&P 500 at Wikipedia, Investopedia, and S&P Dow Jones Indices.
• Portfolio Risk. Measure of the observed downside volatility of the selected Model Portfolio. Model Portfolios which are diversified among asset classes, such as bonds in addition to stocks, tend to have lower observed downside volatility compared to Adaptive’s measure of Market Risk.
• Protected Portfolio Risk. This reflects the reduced downside risk of the portfolio, with the selected Protection Level. Increasing the Protection Level—in effect adding more protection— for example from ‘80%’ to ‘90%’ will tend to ‘dial down’ the Protected Portfolio Risk as more protection is added.

Adaptive currently uses an absolute scale for characterized Risk, based on the Risk Weather definition:  

Projected Risk	VIX Range	Notes
Low	0 to 15	VIX 15 is Medium
Medium	15 to 20	VIX 20 is High
High	20 to 30	VIX 30 is Very High
Very High	30 or Greater

  The Projected Value shows possible outcomes for the selected Model Portfolio based on the selected Protection Period, with the selected Protection Level also displayed as Potential Losses. The top and bottom projections represent the least likely outcomes, calculated as likely to occur only three in 1,000 times (three standard deviations).

The Market Protection Estimate is the estimated price of downside protection based on recent trading prices for a market hedge that is liquid and often relatively inexpensive. Price estimates for downside protection are currently based on the S&P 500 market index, Nasdaq market index, and Russell 2000 market index with approximated strike price & expiration. Further refinements are in the works for the Portfolio Protection Calculator.

Market Protection has a trade off of accepting some tracking error, meaning that is protection for a related but not identical portfolio. See Market Protection for the specific ‘put option’ contracts being priced. Adaptive’s Portfolio Protection Calculator adjusts the number of put option contracts, and the associated price estimate, in part based on the so-called ‘beta’ of the Model Portfolio being considered for protection, often resulting in lower estimated protection costs for portfolios which are diversified for example with bonds as well as stocks. Read more about the finance use of ‘beta’ at Investopedia and Wikipedia.

Larger portfolios enjoy some economies of scale. The Adaptive tools also look for Mini contracts when they are available, though rounding and smaller accounts may involve some degree of over-hedging.

This technology preview of the Portfolio Protection Calculator also lists put contracts under Portfolio Protection for individual holdings. Tracking error is typically lower, as compared to Market Protection but the price is usually significantly higher.

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Portfolio Protection Calculator measures downside risks and estimates the cost of downside protection, based on market conditions, for a range of asset allocations and popular model portfolios. Change the Protection Period and Protection Level to see how price estimates (Market Protection Estimate)—and Projected Risk—change for a selected Model Portfolio:

• Protection Level. A higher Protection Level protects more portfolio value, and almost always costs more, all other things being equal, than a lower Protection Level which allows for greater losses. ‘90% Protection’ means that 90% of the portfolio value is protected—in other words, losses are limited to 10% of the total portfolio value and Protection will pay out for any losses in excess of 10%. The higher the Protection Level, the more likely there will be a Protection payout.
• Protection Period. A longer Protection Period protects portfolio value for a longer time, and almost always costs more, all other things being equal, than a shorter Protection Period. The longer the Protection Period, the more likely there will be a Protection payout. Protection can also be renewed (also known as “rolled”) for continuous protection whether each Protection Period is shorter or longer.

(See Adaptive Risk Weather for a broad gauge of whether downside protection is more or less affordable based n market conditions.)

Adaptive seeks to smooth out the ride—and level the playing field—so investors can stay invested for long-term growth with tools which are otherwise the province of the ultra high-net-worth.Request an Adaptive demo or pilot account to test drive our breakthrough fintech technology. Pilot users can securely link brokerage accounts for automated risk analysis and downside protection pricing.

Downside protection, often called a portfolio hedge, is a general term for investments and other agreements which pay off in market and portfolio declines. Common forms include ‘put options’ and futures contracts which require special expertise and trading permissions. Downside protection can limit potential losses, thus reducing the overall risk of a portfolio even while staying invested for potential growth. The cost of downside protection is a drag on a portfolio’s performance, compared to an unprotected portfolio. At the same time downside protection can sometimes lead to improved risk-adjusted returns as compared to buy-and-hold without protection, if protection proceeds are reinvested at lower prices in a portfolio which is growing over the long term.

Understanding your portfolio's top risk contributors helps manage portfolio risk. Possible insights include: • Diversification. The portfolio’s overall risk may be lower than individual components thanks to the benefits of diversification, which is a powerful allocation strategy for reducing risk. Read more about the finance use of ‘diversification’ at Investopedia and Wikipedia. • Position Risk and Position Size.Sometimes you will see that a more volatile position (higher dot) can contribute less to the overall portfolio risk (shorter bar) than a less volatile position which has a bigger weight in the portfolio. Volatile Tesla (TSLA), for example, may not be a big source of portfolio risk if it is relatively a small holding compared to a less volatile holding such as Pfizer (PFE). • Position Risk and Market Risk.Compare the implied volatility of individual positions (the dots) to see if they are above or below the market’s implied volatility. Risk tools such as Portfolio Risk Contribution and Adaptive one-click downside protection can help investors dial down portfolio specific risk and limit losses by changing the way we invest with downside protection.

Portfolio Risk Contribution ranks sources of a portfolio’s overall risk in the volatility of individual position holdings, helping you identify where risk is coming from. You may find some of the results surprising, especially when the portfolio includes riskier individual positions which are diversified (that is, they don’t tend to move together). • Bars Show Risk Contribution of Position. Each bar reflects how much of the overall portfolio’s volatility comes from a specific holding, which is a function in part of the weight of that holding in the portfolio. Bars for all portfolio positions should sum to 100%, though the total may be subject to rounding errors. There are some nuances. Please contact us for more technical information—bars are computed using not only the weight of the stock in the portfolio and the implied volatility of the stock, but also an adjustment based on the correlation of such stock with the rest of the portfolio. This essentially calculates a “marginal” risk contribution for changes in the Portfolio Risk when adding an additional unit of said stock. Because of the correlation adjustments, a negatively correlated position will have a negative bar height signifying negative Risk Contribution—reducing the weight of a negatively correlated position, in other words will raise Portfolio Risk, and adding the weight of a negatively correlated position will reduce Portfolio Risk. The portfolio’s overall risk may be lower than individual components thanks to the benefits of diversification, which is a powerful allocation strategy for reducing risk. Read more about the finance use of ‘diversification’ at Investopedia and Wikipedia. • Dots Show Position Risk. The dots show how ‘stable’ or ‘jittery’ an individual holding is, as measured by the holding’s annualized implied volatility (which is itself determined from the market prices for options on the underlying holding). Dots, in contrast to bars, are not affected by a position’s weight in the portfolio. • Horizontal Blue Line Shows Market Risk. We currently use the VIX as our measure of market risk, though this may be refined further in the future. The VIX, often called the ‘fear index’ or ‘fear gauge’, is roughly a reading of the implied volatility of the S&P 500 for the coming 30 days, as calculated from the price of publicly traded options on the S&P 500. You can think of this line as the ‘position risk’ of the S&P 500, to compare whether individual positions are reading as more or less volatile than the market as a whole. Read more about ‘implied volatility’ and the VIX at Wikipedia, Investopedia, and the Chicago Board Options Exchange. Read more about the S&P 500 at Wikipedia, Investopedia, and S&P Dow Jones Indices.

Downside protection, often called a portfolio hedge, can limit portfolio losses by paying off in the event of a downturn in the value of the portfolio. Downside protection can sometimes also lead to improved risk-adjusted returns as compared to buy-and-hold without protection, if protection proceeds are reinvested at lower prices in a portfolio which is growing over the long term.

Yes, though it requires a pilot account with customization and account-linking features not included in this public Risk Weather tool.Request an Adaptive demo or pilot account to test drive our breakthrough fintech technology. Pilot users can securely link brokerage accounts for automated risk analysis and downside protection pricing.

Risk Weather can’t predict the future, though it is a crystal ball insofar as it measures what investors are expecting in terms of price volatility. In so-called “perfect markets”—an assumption not shared by all market commentators—the price of downside protection should accurately reflect actual market conditions, and there is no investing edge to be had by timing the purchase of downside protection. That said, investors who like to ‘buy low / sell high’ may find Risk Weather Alerts extremely useful for knowing when protection costs are relatively low or high, and for selecting the duration of downside protection coverage—for example buying shorter-term protection such as one week or one month when costs are relatively high, and buying longer-term protection such as three months or one year when costs are relatively low. Downside protection can also be a great tool for getting invested—and staying invested—for exposure to any long-term growth in stock markets, because it limits potential losses without having to exit the market. Risk Weather is not investment advice.

Adaptive currently uses an absolute scale for Risk Weather status, based on the Risk Weather definition: “Frequency” is a measure of how much time the market has spent historically in these various ratings, with “Low” the most common—and “Very High” the most rare—over the last three decades. A chart with both the VIX with S&P500 shows that “Very High” tends to correlate with stock market crashes, such as the Global Financial Crisis of 2008-2009 and the Covid Crash of March 2020.

Yes, you can automate Risk Weather alerts in two forms, for Daily Update email delivery, and also for less frequent Status Update, also email delivery, when the Risk Weather changes, for example from ‘Medium’ to ‘High’. Set an alert now.

Adaptive Risk Weather is a broad gauge of whether downside protection is more or less affordable based on market conditions: when Risk Weather is ‘Low’ or ‘Medium’, the cost of downside protection tends to be lower, as compared to when Risk Weather is ‘High’ or ‘Very High’. Risk Weather measures the market’s expectations for price movements, based on the price premium and implied volatility of publicly traded stock options. Risk Weather communicates if market seas are expected to be calm or stormy, as reflected in the cost of downside protection (‘put options’ are more expensive if danger feared) and the premium which can be charged for selling upside protection (‘call options’ are also more expensive if greater volatility expected). We currently use the VIX as our measure, though this may be refined further in the future. The VIX, often called the ‘fear index’ or ‘fear gauge’, is roughly a measure of the implied volatility of the S&P 500 for the coming 30 days, as calculated from the price of publicly traded options on the S&P 500. Read more about ‘implied volatility’ and the VIX at Wikipedia, Investopedia, and the Chicago Board Options Exchange. Read more about the S&P 500 at Wikipedia, Investopedia, and S&P Dow Jones Indices.

Adaptive seeks to smooth out the ride—and level the playing field—so investors can stay invested for long-term growth with tools which are otherwise the province of the ultra high-net-worth.Request an Adaptive demo or pilot account to test drive our breakthrough fintech technology. Pilot users can securely link brokerage accounts for automated risk analysis and downside protection pricing.

Downside protection, often called a portfolio hedge, is a general term for investments and other agreements which pay off in market and portfolio declines. Common forms include ‘put options’ and futures contracts which require special expertise and trading permissions. Downside protection can limit potential losses, thus reducing the overall risk of a portfolio even while staying invested for potential growth. The cost of downside protection is a drag on a portfolio’s performance, compared to an unprotected portfolio. At the same time downside protection can sometimes lead to improved risk-adjusted returns as compared to buy-and-hold without protection, if protection proceeds are reinvested at lower prices in a portfolio which is growing over the long term.

Adaptive’s Forward Test tool is not investment advice. These kinds of simulations can be used to model the potential range of outcomes for different investment strategies or asset allocations. By comparing the distributions of potential returns, volatility, and downside risk for different scenarios, investors can make more informed decisions about which strategies to pursue and how to manage portfolios.Request an Adaptive demo or pilot account to test drive our breakthrough fintech technology. Pilot users can securely link brokerage accounts for automated risk analysis and downside protection pricing.

Monte Carlo simulations such as Adaptive’s Forward Test tool are only as good as their assumptions about the probability of what is being simulated. If these assumptions are incorrect or poorly calibrated, the simulation results may be inaccurate or misleading. To address this, it is important to use realistic and well-calibrated inputs, and to perform sensitivity analysis to test the robustness of the results to different assumptions. Please contact us for more technical information. Forecasting tools tend to assume long-term growth in stocks, in keeping with long-term trends. Adaptive’s Forward Test, however, does not currently assume growth—instead it assumes a market on the whole that goes nowhere even though this likely underestimates the gains in long-term portfolios. Some of other Adaptive’s inputs include: historical returns for correlation estimates; implied volatility for calculating forward returns; and historical volatility, in part as a sanity check for implied volatility calculations.

A key feature of Adaptive’s Forward Test is the ability to simulate the possible effects of downside protection, and to compare outcomes to a portfolio without downside protection. The interaction of Simulation Length, Protection Period, and Protection Level can affect these results. • Protection Renewals.If the Simulation Length is longer than Protection Period, say five years of Simulation Length and one year of Protection Period, then the simulation assumes renewals of the downside protection at the same Protection Level and Protection Period. This assumption can greatly affect simulation results in part because the Protection Level is expressed as a percentage, so renewals for a rising portfolio will have higher dollar levels of protection, and likewise renewals for a falling portfolio will have lower dollar levels of protection. There are a few nuances: (1) any Protection Payouts are added to the market value of the portfolio, in effect simulating reinvestment at the lower prices and, in an overall rising market, using Protection Payouts to ‘buy the dips’ as a potentially potent form of countering negative compounding; (2) whether there are Protection Payouts or not, the Forward Test finances Protection renewals out of the market value of the portfolio, meaning that there is some rebalancing to maintain portfolio allocations; (3) the Forward Test uses the current implied market volatility as its assumption for the cost of any renewals during the simulations, but in the real world the cost of renewals will be affected by the market conditions which might price protection higher or lower than current levels.

Forward Test games out possible investment returns in the future, based on the risk of your portfolio and its components, by charting many possible paths and the likelihood of various outcomes. The largest gains and losses tend to be the least likely, akin to the low probability for instance of repeated coin tosses which are almost all heads or almost all tails. Forward Test also help you compare the effects of downside protection for a portfolio in limiting potential losses. Forward Test is a form of Monte Carlo simulation, which can be helpful for making more informed decisions and managing risk, by considering a wide range of potential outcomes. Read more about the use of Monte Carlo simulation in finance at Investopedia and Wikipedia.