How to pick a benchmark for you portfolio and beat the market What is a benchmark?
A benchmark is an index or a basket of assets used to evaluate the performance of an investment portfolio In the context of portfolio analysis the benchmark serves as a point of comparison to determine whether a fund a strategy or an investment is performing better worse or in line with the reference market.
In the current chart, Bitcoin ( BINANCE:BTCUSDT ) is displayed with a solid and larger blue line in relation to other cryptocurrencies for the current period.
Benchmarks are essential tools for institutional and private investors as they allow measuring the effectiveness of asset allocation choices and risk management Additionally they help determine the added value of an active manager compared to a passive market replication strategy.
Benchmark analysis example: NASDAQ:TSLA - NASDAQ:NDX
Benchmark analysis example: NASDAQ:TSLA - NASDAQ:AAPL - NASDAQ:NDX
What is the purpose of a benchmark
The use of a benchmark in portfolio analysis has several objectives
1) Performance Evaluation: Provides a parameter to compare the portfolio's return against the market or other funds
2) Risk Analysis: Allows comparing the volatility of the portfolio against that of the benchmark offering a measure of risk management
3) Performance Attribution: Helps distinguish between returns derived from asset selection and those linked to market factors
4) Expectation Management: Supports investors and managers in assessing whether a portfolio is meeting expected return objectives
5) Strategy Control: If a portfolio deviates excessively from the benchmark it may signal the need to review the investment strategy
How to select an appropriate benchmark?
The choice of the correct benchmark depends on several factors:
1) Consistency with Portfolio Objective: The benchmark should reflect the market or sector in which the portfolio operates
2) Representativeness of Portfolio Assets: The benchmark should have a composition similar to that of the portfolio to ensure a fair comparison
3) Transparency and Data Availability: It must be easily accessible and calculated with clear and public methodologies
4) Stability Over Time: A good benchmark should not be subject to frequent modifications to ensure reliable historical comparison
5) Compatible Risk and Return: The benchmark should have a risk and return profile similar to that of the portfolio
Most used benchmarks
There are different benchmarks based on asset type and reference market Here are some of the most common.
Equity
FRED:SP500 Representative index of the 500 largest US companies.
NYSE:MSCI World Includes companies from various developed countries ideal for global strategies
FTSE:FTSEMIB Benchmark for the Italian stock market
NASDAQ:NDX Represents the largest technology and growth companies
Bonds
Barclays Global Aggregate Bond Index Broad benchmark for the global bond market
JP Morgan Emerging Market Bond Index EMBI Benchmark for emerging market debt
[* ]BofA Merrill Lynch US High Yield Index Representative of the high-yield bond market junk bonds
Mixed or Balanced
6040 Portfolio Benchmark 60 equities SP 500 and 40 bonds Bloomberg US Aggregate used to evaluate balanced portfolios
Morningstar Moderate Allocation Index Suitable for moderate-risk investment strategies
Alternative
HFRI Fund Weighted Composite Index Benchmark for hedge funds
Goldman Sachs Commodity Index GSCI Used for commodity-related strategies
Bitcoin Index CoinDesk BPI Benchmark for cryptocurrencies
A reference benchmark is essential in portfolio analysis to measure performance manage risk and evaluate investment strategies The selection of an appropriate benchmark must be consistent with the strategy and market of the portfolio to ensure meaningful comparison.
Understanding and correctly selecting the benchmark allows investors to optimize their decisions and improve long-term results.
Benchmark
Communications is KeyIn my honest opinion here. When looking at S&P through RRG, Communications sector XLC looks really good long term. Short term watch out as we could go as low as 70's or more before the bounce. But this should offer a nice low point of buy in, providing the FED does not mess it up. Pay attention to Communications news over this time span. maybe a week or two max.
Dogecoin and minor major pivots Due to the Price movement we have experienced a level which has been supported by the level of Jepsian and due the price movement I have market the level of minor pivots used from Ichimuko benchmarks (Senko Span A).
If these levels could accepted, price could rise to the orange level and level of price action (Supply and Demand zone)
Dogecoin ~ Egod
with respect to Elon musk:)
The Moving Average Crossover Strategy - How to choose the best?Hey there!
Well, this is not a trading idea actually. I just want to present my new tool to the community.
This tool will help you to choose a type of moving average to create the most profitable trading system based on crossovers.
Click on the price scale, point to "Labels" and switch off "No Overlapping Labels" option to get a better view.
Detailed description can be found here .
I repeat
NOTE: The results may vary on different tickers and timeframes.
If you see the preview result it doesn't mean that these crossovers will be profitable on other instruments and timeframes. This is a normal situation because time series and their characteristics differ.
I know that because I tested this tool before publishing.
NOTE 2: You can use this tool by yourself and experiment with it, or you can order a study and I will share the spreadsheet that contains results. PM me for more details.
Good luck and happy trading!
BHE: Benchmark Electronics Gartley PatternThe market move sideways last few months, that creates a good opportunity for harmonic traders. However, the price was bullish last few days. It reached 30.8 and getting close to the major resistance level at 31.15
This is the main area where the buyers and sellers usually make their decisions. Sellers go short and buyers take profit, that cause the price to go down. Moreover, the Gartley pattern was formed and the price already hit its entry level, 127% AB Fibonacci extension. This increases the probability of this setup and provides a clear guidance where to enter and exit. I await the market to be opened today and then go short.
T1 – 38.2
T2 – 61.8
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Let's Get CoinMarketCap Data On Tradingview!getsatisfaction.com
Alright guys, I got permission from the founders email to post this as an idea, so don't try to ban me!! haha. But you all PLEASE go vote for this on the link! I would love for Tradingview to get the Coinmarketcap data of market cap so we as analyst can track the cash flows going in and out of the market! I think this would be the closest thing we could get to indices like the DOWJ, Nikkei, etc. as far as just tracking the growth of the market as a whole.
I think we could analyze it to the depth where we can try to predict when the market may take hits, or when the market is expected to grow. Some investors may even use it as a benchmark for their portfolio growth. I would love to add this on here and there would be many more positives to this than negatives (if there are any) in my opinion. PLEASE Like, share, spread the message and DONT forget to vote! I can't tell you all how important I think this is.
VOTE VOTE VOTE. EBALL FOR PRESIDENT.
Sidenote: Isn't that a beautiful background? :D