Portfolio Stratification

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Definition

Portfolio Stratification (also Pool Stratification) is the practice of aggregating information (thus partitioning) and analyzing a Portfolio using characteristics perceived as significant in a given context.

Usage

Stratification involves the production of summaries of pool characteristics (stratification tables) as they relate to attributes such as

asset type
vintage (origination period)
size (amounts)
geographical distribution and
a variety of risk characteristics (credit scores, delinquency status etc.)

Issues and Challenges

Skillful manipulation of the stratification segments can potentially help produce a misleading impression as to the actual nature of the portfolio