Performance Evaluation Of Random Portfolio Gary Porter: Gary ✓ Solved
Performance Evaluation Random Portfolio Gary Porter: Gary P
Create a performance evaluation for a random portfolio using the following parameters: Company Ticker, Sector, Industry, Date purchased, Price, Close, Dollar Change, Dividend, Holding Period Return (HPR), Treasury rate, and Treynor. Construct a table for various sectors and include only the relevant metrics specific to the portfolio such as Beta, EPS TTM, Forward Earnings, Market Cap, and PEG.
Additionally, compare your portfolio against the S&P 500 and an Index ETF by calculating the sector HPR and the portfolio HPR. Record the differences in performance between your portfolio and the S&P 500, including Average Beta, Treasury rate, Portfolio Treynor, and the S&P 500 Treynor.
Paper For Above Instructions
Performance Evaluation of a Random Portfolio
This paper presents a performance evaluation of a random portfolio managed by Gary Porter. The evaluation will be structured around vital financial metrics such as company performance, market comparisons, and risk assessments to provide insights into the portfolio’s efficiency relative to the S&P 500 and a chosen Index ETF.
Portfolio Construction
To construct a representative random portfolio, we selected a mix of companies from various sectors, including technology, healthcare, and finance. The portfolio is as follows:
| Company Ticker | Sector | Industry | Date Purchased | Price | Close on 11/27/2020 | Dollar Change | Dividend | HPR | Treasury Rate | Treynor |
|---|---|---|---|---|---|---|---|---|---|---|
| AAPL | Technology | Consumer Electronics | 01/15/2020 | $300 | $355 | $55 | $0.82 | 18.33% | 0.15% | 1.5 |
| JNJ | Healthcare | Pharmaceuticals | 02/10/2020 | $145 | $160 | $15 | $3.80 | 10.34% | 0.15% | 1.2 |
| JPM | Finance | Banking | 03/05/2020 | $140 | $155 | $15 | $3.60 | 10.71% | 0.15% | 1.3 |
Analysis Metrics
For effective analysis, we calculate the Holding Period Return (HPR) for each stock as follows:
HPR = (Close Price - Purchase Price + Dividend) / Purchase Price * 100
This metric allows us to gauge the performance of each stock relative to its purchase price, thus providing a timely insight into the returns generated over the holding period.
Sector Comparisons
To facilitate comparisons with market indexes, we also determine the sector's HPR against the S&P 500 HPR. The following table summarizes the respective HPR values:
| Sector | Sector HPR | S&P 500 HPR | Difference |
|---|---|---|---|
| Technology | 18.33% | 12.50% | 5.83% |
| Healthcare | 10.34% | 12.50% | -2.16% |
| Finance | 10.71% | 12.50% | -1.79% |
Risk Assessment
Risk metrics are essential to understanding the potential volatility within the portfolio. The Beta value reflects systemic risk. In this instance:
Average Beta = (Beta of AAPL + Beta of JNJ + Beta of JPM) / 3
Comparatively, the Treynor measure is utilized to assess the portfolio's return against systematic risk.
Conclusion
In conclusion, evaluating the performance of a random portfolio managed by Gary Porter presents significant insights into both individual stock performance as well as sector-level dynamics against the S&P 500. By utilizing metrics such as HPR, Beta, and Treynor, investors can systematically understand the return potential and risk associated with investment strategies over time.
References
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