What Is a Decision Score? How Finasim Rates Your Financial Choices
Every simulation generates a 0–100 Decision Score. Here's the methodology behind it.
Why You Need a Score
When you run a Monte Carlo simulation comparing two financial strategies, you get a rich set of data: P10, P50, P90 outcomes, fan charts, probability distributions. But for most people, the question is simple: “Which option should I pick?”
That's what the Decision Score answers. It's a single 0–100 number that synthesizes all the simulation data into an actionable rating.
How It's Calculated
The Decision Score uses a risk-adjusted expected value framework inspired by the Sortino Ratio and the Omega Ratio — both widely used in professional portfolio management. Here's the simplified methodology:
Score = f(Expected Value, Downside Risk, Upside Potential, Consistency)
- Expected Value (40% weight): The weighted average outcome across all 300 simulations, tilted toward the median (P50) to reduce outlier sensitivity.
- Downside Risk (30% weight): How bad is the P10? Larger downside risk reduces the score. This is the key differentiator vs simple averages.
- Upside Potential (15% weight): How good is the P90? Having a high ceiling adds value, but less than having a safe floor.
- Consistency (15% weight): How narrow is the P10–P90 spread? Tighter distributions score higher because they indicate more predictable outcomes.
Score Ranges
- 80–100 (Excellent): Strong median outcome with limited downside. High confidence in positive results.
- 60–79 (Good): Favorable median outcome but some meaningful risk in the P10 case.
- 40–59 (Moderate): Mixed results. Could go either way depending on market conditions.
- 20–39 (Poor): The downside risk outweighs the upside. Proceed with caution.
- 0–19 (Avoid): High probability of negative outcomes. Likely a suboptimal strategy.
Important Caveats
The Decision Score is a relative metric, not an absolute one. A score of 75 doesn't mean a strategy will work 75% of the time. It means it rates well across the four dimensions compared to a baseline.
The score also doesn't account for personal factors like emotional tolerance, life stage, or career stability. You might reasonably choose a lower-scoring but more predictable option if peace of mind matters more to you than maximum returns.
See Your Score
Every simulation you run in Finasim automatically generates a Decision Score. Compare strategies side-by-side and let the data — not guesswork — guide your choice.