The following list of forty (40) stocks was suggested by a reader for Quantext Portfolio Planner (QPP) analysis. Long time readers of ITA know that QPP is a software program developed by Geoff Considine, author of a blog, The Portfolioist.
QPP Analysis: The following list of 40 stocks results in a well-diversified portfolio as indicated by the Diversification Metric. Anything over 40% is considered excellent and this portfolio generates a 42% value. The S&P 500 is assumed a growth rate of 7.0% over the next six to twelve months and this portfolio is projected to generate a 7.5% return with only a 12% standard deviation. This gives rise to a projected Return/Risk ratio of 0.63. Anything over 0.6 is highly valued.
Check the Historical Data below and see how this group of stocks performed compared to the S&P 500. What is particularly impressive is the difference in portfolio volatility. This portfolio was 6.6% points lower than the S&P 500, a huge difference.
Correlation Matrix: The QPP software considers 80% or higher to be highly correlated and anything below 50% to be low. Most of the stocks in this combination are either moderately correlated or fall into the low correlated bracket.
At a later date I will run an optimization-momentum analysis of this portfolio. Keep checking in for that analysis.