After the Risk Number is calculated, you may wonder why Riskalyze determines a portfolio to be riskier, or less risky than you initially expected. By using the Risk / Reward Heatmap, you can pinpoint which holdings are having the greatest impact on the total risk of the portfolio. You can drill down even further by viewing the specific analytics for each holding,
The Risk / Reward Heatmap provides an at-a-glance view of investments with more risk and more reward. Toggle on the Heatmap by clicking Risk / Reward Heatmap on the right-hand side of the portfolio. This will break down the diversified risk, risk and given reward within a portfolio.
Viewing a Holding's Key Analytics
You can view the specific details of any holding by clicking on the holding's name. The Risk / Return Scenario will appear with information on the holding's best case, worst case and projected returns, as well as other information. All numbers are based on our data model and are within a 95% Historical Range™. Here's a breakdown of what's included:
- Return Mode: indicates whether the security is using the Beta-weighted, Tactical, Interest Rate Sensitive, or Average Annual Return return mode, as described here.
- Worst case: within the next six months, we calculate a 95% certainty that it will perform no worse than this.
- Best case: within the next six months, we calculate a 95% certainty that it will perform no better than this.
- Return: for the given security, the historical six-month return.
- Volatility: similar to beta, this depicts the potential price action swings in a six-month range.
- Annual dividend: trailing twelve months (TTM) of normal dividends.
- Expense Ratio: the annual expense ratio of the security.
By examining each of these variables, it becomes incredibly simple for an advisor to identify which investments are adding the most risk, which are adding the most reward, and how to adjust the portfolio in the client’s favor.