Tag Archives: Benchmark

Comparing my assets with its benchmark: some figures for analysis

Comparative figures asset benchmark

As investors, we look for the best performance. A good performance is not only an absolute figure, but also a relative one, when we make comparisons. For instance, if a share in our portfolio has a performance of 10% in a year, we can think that it is a nice number, in absolute terms. But if the reference index of the share has performed a 15%… well, it is not so nice. That is why it is interesting to take into account some figures to understand if our securities have a good quality compared with their benchmarks:

  • Relative trend of the security versus index: it compares both behaviours. If the figure is positive, the security is strong versus the index. If it is negative, there is a weakness. It is one sign to detect if our stock or fund is performing properly against the index.
  • Tracking error: this indicator measures the deviation of the difference in daily returns of the security and the benchmark. A higher figures shows that the daily returns of the security has a larger difference compared with the daily returns of the index.
  • R 2: it measures the similarity of the daily behaviour of both the asset and the index. If the figure is near to 1, there is a strong parallelism. If it is near 0, there is no relation.
  • Correlation: if R 2 measures the similarity of the behaviour, this provides more specific information. If the figure is near to 1, there is a positive correlation (both move identically in the same trend). If it is near to -1, the correlation is negative (both move identically in opposite trends). If it is near to 0, there is no correlation.

R 2 and correlation are very important to find assets not linked with the benchmark if its evolution is negative, for instance, when the index drops. On the other hand, it is also interesting to find correlated assets when the index soars.

  • Alpha and beta: both are quite important to measure the outperformance and volatility of the asset compared with the benchmark. We have an extended explanation in this post. Typical investor behaviour is looking for assets with good alpha.

Of course, the analysis of a single reference is not enough to get an idea about the relationship between the asset and the index. We have to look at all data and connect them to understand in a right way if we should put our money there or just go our quickly.

Don’t miss the new improvements in T-Advisor!

T-Advisor, the self-directed platform for smart investors, is always evolving to improve its features for a better service. Our last upload has included several details to enjoy more the investment experience. Let’s discover them!

My targets

The new button in the module “My investments” is our investment planner. You will be able to save your plans while creating your portfolios to achieve the goals.

Invesment planner integrated in T-Advisor

New comparisons for your portfolios

Compare them with the smart benchmark and other benchmarks of different markets.

New improvements in T-Advisor: several benchmarks

You can also compare your portfolios and also with others that you follow. Returns, risks, positions, asset class distribution and gamification features are comparable with this tool. It will help you learn what is working and failing taken into account other portfolios.

Tool to compare portfolios in T-Advisor

New ways to find good investment ideas

We have developed a “top score” tool in the “My Reseach” module. You can select four different top stocks (Europe, Asia, USA and Latam) and two different top funds (fixed-income and equity).

Top score tool in T-Advisor

If you prefer, you have a full search machine in “Screener”. Look for new securities for your portfolio selecting the type of asset, market, manager, currency and asset class. You can also select a score range for your search.

Screnner in T-Advisor

With the Screener, you can add directly an asset in your portfolios, compare securities or use the optimiser tool.

We become more social

Do you want to know who are the best investors in T-Advisor? Or the best performing portfolios? You can learn it just with a click on the button “Ranking” in the topside of your screen.

Users ranking in T-Advisor

T-Advisor wants to become your platform for your investments. We know what individuals demand and add solutions progressively in our system. At the end, you feel continuously that you manage your portfolios with professional tools, but we have made it easier and more accessible. Feel the investment experience with T-Advisor!