What are the measures of portfolio evaluation?

What are the measures of portfolio evaluation?

Today, there are three sets of performance measurement tools to assist with portfolio evaluations. The Treynor, Sharpe, and Jensen ratios combine risk and return performance into a single value, but each is slightly different.

Which is an appropriate method for portfolio performance evaluation?

The major methods are the Sharpe ratio, Treynor ratio, Jensen’s alpha, Modigliani and Modigliani, and Treynor Squared. The risk-adjusted methods are preferred to the conventional methods.

What 5 steps should you take when evaluating your portfolio?

  1. Step 1: Upload Your Portfolio to an Investment Tracking Tool. The first step is to input your portfolio into an investment analysis tool.
  2. Step 2: Evaluate Your Stock and Bond Allocation.
  3. Step 3: Evaluate Stock Allocation.
  4. Step 4: Evaluate Bond Allocation.
  5. Step 5: Evaluate Specific Funds.
  6. Step 6: Evaluate Advisor Fees.

How do you measure the performance of a stock portfolio?

The simplest way to calculate a basic return is called the holding period return. Here’s the formula to calculate the holding period return: HPR = Income + (End of Period Value – Initial Value) ÷ Initial Value.

Why evaluation of portfolio performance is needed?

INTRODUCTION • The portfolio performance evaluation involves the determination of how a managed portfolio has performed relative to some comparison benchmark. The performance review must generate and provide information that will help the investor to assess any need for rebalancing of his investments.

What are portfolio strategies?

Portfolio Strategy is a roadmap by which investors can use their assets to achieve their financial goals. • It refers to the design of optimal portfolios and its implication .

What are the four steps in the portfolio management process?

The Four Key Steps for Successful Portfolio Management

  1. Executive Framing. The executive framing is always first.
  2. Data Collection. The next step is to collect the data.
  3. Modeling and Analysis. Modeling and analysis are best done by someone (or a team) with both modeling and business savvy.
  4. Synthesis and Communication.

How do you show value your portfolio?

How to Calculate Portfolio Value

  1. Determine the current value of each stock in your portfolio.
  2. Determine the number of shares of each stock you own.
  3. Multiply the current price by the number of shares owned to find the current market value of each stock in your portfolio.
  4. Sum both amounts for the total market value.

What is performance evaluation and how?

Performance evaluation is the process by which manager or consultant examines and evaluates an employee’s work behavior by comparing it with preset standards, documents the results of the comparison and uses the results to provide feedback to the employees to show where improvements are needed and why.

What are the key elements of portfolio assessment?


  • Cover Letter “About the author” and “What my portfolio shows about my progress as a learner” (written at the end, but put at the beginning).
  • Table of Contents with numbered pages.
  • Entries – both core (items students have to include) and optional (items of student’s choice).

How to evaluate the performance of a portfolio?

Portfolio Performance Evaluation 1 Average Rates of Return. The time-weighted rate of return, also called the geometric mean return, is a measure of the compound growth rate of a portfolio. 2 Appropriate Applications. 3 Adjusting Returns for Risk. 4 Statistical Significance of Alpha Returns. 5 Performance Attribution Procedures.

How is the Jensen measure of portfolio performance calculated?

Similar to the previous performance measures discussed, the Jensen measure is calculated using the CAPM. Named after its creator, Michael C. Jensen, the Jensen measure calculates the excess return that a portfolio generates over its expected return. This measure of return is also known as alpha. 4 

How is the Treynor ratio used to measure portfolio performance?

The Treynor ratio, also known as the reward-to-volatility ratio, is a performance metric for determining how much excess return was generated for each unit of risk taken on by a portfolio. The Sharpe ratio is used to help investors understand the return of an investment compared to its risk.

How to evaluate the performance of a hedge fund?

Portfolio Performance Evaluation 1 Average Rates of Return. 2 Appropriate Applications. 3 Adjusting Returns for Risk. 4 Statistical Significance of Alpha Returns. 5 Challenges in Measuring the Performance of Hedge Funds. 6 Style Analysis. 7 Performance Attribution Procedures.