Portfolio metrics
Portfolio metrics are quantitative measures used to evaluate the performance and characteristics of a collection of trades within a trading portfolio. Here are some of the most commonly used portfolio metrics in trading:
💡
Portfolio metrics are like the treasure map for investors, guiding them to hidden gems and ensuring their investments strike gold!
- Diversification Ratio: Measures the degree to which a portfolio’s risk is reduced through diversification.
- Correlation Matrix: Displays the correlation coefficients between different assets in a portfolio, indicating how they move in relation to each other.
- Sector Allocation: The distribution of investments across various sectors within a portfolio.
- Asset Allocation: The distribution of investments among different asset classes, such as stocks, bonds, and cash.
- Turnover Rate: The rate at which assets in a portfolio are bought and sold over a specific period.