Investment risk analysis
I would like to see an option where I could get a report on the relative risk of the entire investment portfolio. Is the overall portfolio as risky as bonds, large cap stocks, small cap stocks, etc.
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1 Posted by Brian Adler on 17 Jan, 2011 07:49 AM
Lawrence,
I'm not sure I understand we could implement your suggestion. How would Moneydance determine the overall risk of your portfolio? What metric would it use?
Best,
Brian Adler
Moneydance Support
2 Posted by lawrence on 17 Jan, 2011 06:49 PM
Well, this is a request from the back in 2007 (listed below) and is the first step. This should be doable as it is just adding one extra field. You could keep the categories general with the ability to add.
Risk, in the contect of this discussion is captured in a measurement called "beta". It is widely calculated in the financial world on individual securities and class of assets. This would probalby end up being yet another field for each asset in a table somewhere.
I will get more information. I remember Quicken Premier did this years ago but I haven't looked at the product in a while. It still may have this function. They were probably pulling beta form some public source.
(original request in the old forums:) Since asset allocation is now considered one of the most fundamental aspects to investing, could you add the ability to add security types, and illustrate them in the report and graphs? Right now there are stock, mutual fund, etc., but the particular categories of mutual funds and stocks play the biggest role, e.g. large cap, mid cap, international, etc. Trying to include them all would be a long and changing list, so allowing some additions would be the ideal.
3 Posted by Brian Adler on 21 Jan, 2011 07:23 AM
Lawrence,
I have created a suggestion ticket reflecting your request. If you do find more information explaining how risk in this context is measured and calculated (or how to find beta), that would certainly be helpful to us in possibly implementing your request in the future.
Sincerely,
Brian Adler
Moneydance Support
4 Posted by murkee on 21 Jan, 2011 05:31 PM
My (albeit, possibly wrong) understanding, is that beta is a measurement of how closely something tracks an index.
I did a search and got:
http://en.wikipedia.org/wiki/Beta_(finance)
5 Posted by murkee on 21 Jan, 2011 05:32 PM
See also http://en.wikipedia.org/wiki/Alpha_(finance)
6 Posted by Angie Rauscher on 21 Jan, 2011 05:35 PM
Murkee,
Thanks for this info, I'll attach it to the discussion.
Angie Rauscher
Moneydance Support
7 Posted by lawrence on 21 Jan, 2011 08:19 PM
I will get you some info.
8 Posted by lawrence on 22 Jan, 2011 04:09 AM
this might help. Risk for stocks is measured by standard deviation. He is info on how it is calcuated using Yahoo's info:
http://www.optiontradingtips.com/options101/volatility.html
I just received a risk analysis for my organization from a professional advisor and his software uses standard deviation. This validated this is what people in the financial business use.
There is other info online regarding standard deviation.
9 Posted by Brian Adler on 22 Jan, 2011 07:34 AM
Thank you Lawrence, this should be helpful when we are ready to evaluate and possibly implement your suggestion. I agree that it is a good one.
Regards,
Brian Adler
Moneydance Support
System closed this discussion on 31 Mar, 2015 03:36 PM.