Unknown Indicator

Risk Adjusted Performance In A Nutshell

Risk adjusted performance allows you to depict the return and the risk almost as two separate numbers. This type of data figure can be applied to securities, portfolios, and funds. If you are familiar with options, then you many know the Greeks that measure risk, and you can use those along with any other data point you may have.

Risk is an extremely important factor when choosing your next investment or building your first portfolio. Risk adjusted performance measures the risk that is associated with generating the return that is desired.

Closer Look at Risk Adjusted Performance

Risk boils down to an individual level and is hardly ever the same across the board. For example, if you are in your twenties, it may be in your best interest to take the risks and go after the larger returns. On the flip side, it may not be the best to take on risk if you’re sixty years old and retiring soon.

It is also important before you invest in a fund to measure their risks against the benchmark and what the fund is returning. For index funds, you should typically see the same across the board, but for sector specific, it may not be the same. Take the time to read through the prospectus of each fund you are looking at because it can give you insight into the objectives of the fund, which you want to ensure line up with your investment objectives.

Lastly, you want to look at the performance of the fund because that it what we all really care about in the end. Take a look at the longer time frame because people typically invest in a fund as long term investments. With all of that said, this is where you can implement the risk adjusted performance statistic.

Just like any new investing tool, be sure to test it out and test it on a demo account first to see if it fits your current investing style. This may not be for everyone, but knowing how to implement it can be beneficial for other endeavors down the road. Join an investing community so you can bounce ideas off of them and see how other people are using the same tool. Risk is important and performance is important, using risk adjust performance can help combine those into a number suitable for comparing against others.

Use Investing Themes to Complement your positions

You can quickly originate your optimal portfoio using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run Machinery Thematic Idea Now

Machinery
Machinery Theme
Fama and French investing themes focus on testing asset pricing under different economic assumptions. The Machinery theme has 61 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Machinery Theme or any other thematic opportunities.
View All  Next Launch
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Global Correlations
Find global opportunities by holding instruments from different markets
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges