Given a portfolio consists of Stock = usd 40, Bond = usd 40, commodity =usd 20. Also given the correlation between these assets.
Scenario 1 : stock down by 30%
When performing scenario analysis, do we usually take correlation into account? or just do it this way:
Stock= 40*0.7=28 Bond= 40 Commodity= 20
Thus portfolio value becomes usd 88.
Is this the correct way to do scenario analysis?