Unknown Indicator

Information Ratio In A Nutshell

This begins the endeavor into the weeds of finding which investment is going to fit your current portfolio. Beyond benchmark performance, you want to keep in mind the expense ratio and other costs associated with the particular. Reading the information ratio is simple, the higher the number the better the product has done against the respective benchmark.

With the many different products out there, people are always asking how the particular fund is giving them an edge in the market. More specifically with ETF’s and mutual funds, many wonder how they are beating the benchmark and how often they are doing so. The information ratio seeks to give us an answer to this question by measuring how a portfolio fairs compared its respective benchmark.

Closer Look at Information Ratio

The number itself may not tell you the whole story so it is critical that you dig a little deeper. As an investor, you want to understand the risks and how the company is achieving outperformance. It could be from leveraging or other practices, so it is crucial that those align with your investing views.  

Using the information ratio a reasonable way to begin narrowing your search for potential investments. You may also find that the sharp ratio is another effective way to find the appropriate portfolio to invest in. Pick apart the portfolio understanding the reason for the holdings and what is involved with the selection process. Also look at the track record of the manager and see if they have a history of success. All of these factors are important to consider when looking for a particular fund.

Generate Optimal Portfolios

The classical approach to portfolio optimization is known as Modern Portfolio Theory (MPT). It involves categorizing the investment universe based on risk (standard deviation) and return, and then choosing the mix of investments that achieves the desired risk-versus-return tradeoff. Portfolio optimization can also be thought of as a risk-management strategy as every type of equity has a distinct return and risk characteristics as well as different systemic risks, which describes how they respond to the market at large. Macroaxis enables investors to optimize portfolios that have a mix of equities (such as stocks, funds, or ETFs) and cryptocurrencies (such as Bitcoin, Ethereum or Monero)
Fix your portfolio
By capturing your risk tolerance and investment horizon Macroaxis technology of instant portfolio optimization will compute exactly how much risk is acceptable for your desired return expectations
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk