## Company Info

## FAQs

- Why should I use Portfolio Monkey over other investment tools?
- What securities and markets do you provide support for?
- What do I need to get started?
- Is the Portfolio Monkey site secure?
- What is Portfolio Monkey’s overall approach?
- How does Portfolio Monkey calculate expected returns for individual securities?
- Do I have to use Portfolio Monkey’s return estimates?
- How does Portfolio Monkey calculate expected returns for portfolios?
- How does Portfolio Monkey calculate volatility?
- What is Efficiency Ratio and what does it tell me about my portfolio?
- How do you determine the current percentage weighting for each security in my portfolio?
- How does Portfolio Monkey optimize my Portfolio?
- What does the Bananas Score tell me about my portfolio?
- Help me understand your expected return projections. Are you saying this is what my portfolio is going to earn each year?
- Why does Portfolio Monkey indicate that I should completely sell one or more of my holdings?

## General

## How does it work?

## What does it mean?

- σ
_{i}is the standard deviation of security i - ω
_{i}is the weight of security i - ρ
_{i,j}is the correlation between securities i and j

Portfolio Monkey was designed by investors for investors. We cut through the marketing and packaging of investment products to provide baseline analysis that is unbiased. We do not sell advisory services and do not subscribe to one narrow strategy. We do believe, however, that investors should take a “portfolio approach” to evaluating their investments rather relying on individual stock picking. We provide deep analytics that can be easily adopted to different risk profiles and investment strategies. We don’t believe it’s easy to beat the market, but if you’re going to try, you should give yourself the best statistical opportunity to do so.

We currently support over 30,000 securities in our database, including US stocks, Mutual Funds, Exchange Traded Funds (ETFs), and index funds. We cover all major U.S. exchanges and will add International markets in the future. If you can’t find what you’re looking for, please let us know and we’ll do our best to accommodate.

All you need is a valid email address that serves as your login ID. You will then create a secure password and you’re ready to go. Click here to get started.

Portfolio Monkey understands and values your privacy. As such, our top priority is protecting the privacy and security of each user’s information. We keep our site and all user information entirely secure and do NOT disclose or share any user information to outside vendor services. We do not use personally identifiable information in our analytics and use SSL security and encryption technology process and communicate any information with the user.

At our core, we believe in taking a portfolio approach to investing. Unlike many investment-oriented sites out there that focus on stock picking based on qualitative, company-specific factors, our focus is on helping investors understand the quantitative impact of buying and selling different securities on their portfolios.

Portfolio Monkey seeks to fill the “quantitative void” in investors’ research and due diligence process. We believe our analytical tools can help investors understand the overall risk and return potential of their portfolios, quantify the expected impact of adding different securities on their portfolio’s attributes, and identify stocks, mutual funds, and ETF’s from the universe of publicly-traded securities that provide the best portfolio fit. Again, we don’t believe it’s easy to beat the market (most actively managed funds do not beat their corresponding market benchmark), however, if you’re going to try, you should give yourself the best statistical opportunity to do so.

Portfolio Monkey seeks to fill the “quantitative void” in investors’ research and due diligence process. We believe our analytical tools can help investors understand the overall risk and return potential of their portfolios, quantify the expected impact of adding different securities on their portfolio’s attributes, and identify stocks, mutual funds, and ETF’s from the universe of publicly-traded securities that provide the best portfolio fit. Again, we don’t believe it’s easy to beat the market (most actively managed funds do not beat their corresponding market benchmark), however, if you’re going to try, you should give yourself the best statistical opportunity to do so.

Portfolio Monkey utilizes a number of widely followed factor models such as the Market model, Fama-French, and Carhart to predict estimates of expected returns for individual securities.

In general, these models evaluate how closely a security’s past price behavior can be explained by various company-specific factors such as beta, size, value, and momentum.

Models are selected based on fit for each individual security and investment horizon. Estimates are updated on a monthly basis at the beginning of each month.

It’s impossible to accurately predict returns for individual securities – that’s the Holy Grail in the investing field. No one knows for certain what the future holds.

We do, however, believe that the academic models we use provide a theoretical framework for understanding the expected return potential for individual securities. We do the heavy computational lifting behind these factor models as a service to the user. If you disagree with Portfolio Monkey’s estimates, we highly encourage you to input your own assumptions.

In general, these models evaluate how closely a security’s past price behavior can be explained by various company-specific factors such as beta, size, value, and momentum.

Models are selected based on fit for each individual security and investment horizon. Estimates are updated on a monthly basis at the beginning of each month.

*Take Portfolio Monkey’s estimates with a grain of salt.*It’s impossible to accurately predict returns for individual securities – that’s the Holy Grail in the investing field. No one knows for certain what the future holds.

We do, however, believe that the academic models we use provide a theoretical framework for understanding the expected return potential for individual securities. We do the heavy computational lifting behind these factor models as a service to the user. If you disagree with Portfolio Monkey’s estimates, we highly encourage you to input your own assumptions.

No. If you disagree with Portfolio Monkey’s estimates, you can always input your own. Portfolio Monkey then will analyze the portfolio based on your estimates and still help you analyze, optimize, and discover new investment ideas.

Portfolio expected return is calculated as the weighted average of the expected returns of the individual securities that make up the portfolio.
For example, if you own 4 stocks in your portfolio, GOOG MSFT, GE, and WMT in equal dollar amounts (each is 25% of your portfolio), and the expected returns of GOOG, MSFT, GE, and WMT are 25%, 10%, 4%, and 2%, respectively, then your portfolio’s expected return is 10.25% (calculation illustrated below):

General guidelines for interpreting Expected Return:

GOOG | 25 | 25 | 6.25 |

MSFT | 25 | 10 | 2.50 |

GE | 25 | 4 | 1.00 |

WMT | 25 | 2 | 0.50 |

TOTAL | 100% | N/A | 10.25% |

Greater than 20% | High (best) |

Between 12-20% | Above Average |

Between 6-12% | Average |

Between 0-6% | Below Average |

Less than 0 | Poor (worst) |

For individual securities, Portfolio Monkey calculates volatility as the standard deviation of the security’s historical returns within a specific time horizon. Volatility is expressed in annualized terms.

For portfolios, volatility is a function of the individual volatilities of and correlations between each of the securities in the portfolio. Mathematically, the expression used to calculate portfolio variance is: where:

For portfolios, volatility is a function of the individual volatilities of and correlations between each of the securities in the portfolio. Mathematically, the expression used to calculate portfolio variance is: where:

Less than 12% | Low (best) |

Between 12-18% | Above Average |

Between 18-25% | Average |

Between 25-30% | Below Average |

Greater than 30% | High (worst) |

Efficiency Ratio is a measure of a portfolio’s reward-to-risk ratio and is similar in concept to Sharpe Ratio. Like the Sharpe Ratio, Efficiency ratio allows you to assess whether the expected return potential of the portfolio justifies its risk.

General guidelines on interpreting Efficiency Ratio:

General guidelines on interpreting Efficiency Ratio:

Greater than 1.00 | High (best) |

Between 0.66-1.00 | Above Average |

Between 0.33-0.66 | Average |

Between 0-0.33 | Below Average |

Less than 0 | Poor (worst) |

The weighting of each holding is determined by current market value of the security divided by the total market value of the portfolio.

For example, if your shares in GOOG are worth $20,000 and your total portfolio value is $100,000, then your current weighting in GOOG is 20% ($20,000/$100,000).

For example, if your shares in GOOG are worth $20,000 and your total portfolio value is $100,000, then your current weighting in GOOG is 20% ($20,000/$100,000).

Portfolio Monkey optimizes the weights of each security in your portfolio to give you the highest Efficiency Ratio (i.e., highest expected portfolio return at a given level of volatility).

Portfolio Monkey’s optimization engine is highly customizable, so if the optimal portfolio’s expected return or volatility does not meet your desired targets, you can add risk and return constraints to the optimization by clicking the “Advanced” button and re-optimize.

Portfolio Monkey’s optimization engine is highly customizable, so if the optimal portfolio’s expected return or volatility does not meet your desired targets, you can add risk and return constraints to the optimization by clicking the “Advanced” button and re-optimize.

The Banana Score is a quantitative assessment that evaluates the overall construction of your portfolio.

Portfolio Monkey rates your portfolio on a scale of one-half banana (worst) to five bananas (best) based on popular metrics. The rating is based on how well the portfolio scores in four categories: return potential, riskiness, diversification, and how optimized it is.

(Why bananas? Well, it’s just as arbitrary as using a star rating, so we went with bananas because they’re tastier.)

The Banana Score does not reflect the judgment of any one individual or institution. The Banana Score is a weighted calculation based on popular attributes investors use to assess portfolios – we just do the heavy lifting and package it up for you. Unlike other rating services, we make our system available to users. Contact us to find out how we calculate the Banana Score.

Portfolio Monkey rates your portfolio on a scale of one-half banana (worst) to five bananas (best) based on popular metrics. The rating is based on how well the portfolio scores in four categories: return potential, riskiness, diversification, and how optimized it is.

(Why bananas? Well, it’s just as arbitrary as using a star rating, so we went with bananas because they’re tastier.)

The Banana Score does not reflect the judgment of any one individual or institution. The Banana Score is a weighted calculation based on popular attributes investors use to assess portfolios – we just do the heavy lifting and package it up for you. Unlike other rating services, we make our system available to users. Contact us to find out how we calculate the Banana Score.

Portfolio Monkey’s expected return projections are simply expectations of future results based on assumptions about the expected risk, return, and correlation between the individual securities that make up your portfolio. Of course, nobody, including Portfolio Monkey, can predict what’s going to happen in the future. We do, however, believe we can give you a better statistical chance to improve your risk-adjusted return than if you didn’t use Portfolio Monkey at all.

In some cases the optimal portfolio may exclude one or more of the stocks in your portfolio. When this happens, it means the excluded security (or securities) is not adding enough value (in the form of either higher returns or diversification benefit) to your portfolio to justify keeping it. That means you’re better off reallocating among your existing positions to achieve a higher risk-adjusted return.

Simple Example:

You own four stocks in your portfolio: AMR, GE, UAUA, and WMT.

Expected returns and volatility for each of those stocks are as follows:

Now, assume that AMR (American Airlines) is perfectly correlated to UAUA (United Airlines). It would not make sense to hold AMR since it has a lower expected return and higher volatility than UAUA. You may still want to own an airline stock because of its potential diversification benefit to your portfolio, but probably not both if they’re perfectly or highly correlated with one another. In this highly simplified example, Portfolio Monkey would likely exclude AMR from the optimal portfolio and reallocate those funds to other holdings that would provide more value.

Please note that Portfolio Monkey does not take into consideration the tax implications of buying and selling existing holdings. You will want factor that into your decision making process, if applicable.

Simple Example:

You own four stocks in your portfolio: AMR, GE, UAUA, and WMT.

Expected returns and volatility for each of those stocks are as follows:

Ticker Symbol | Expected Return | Volatility |

AMR | 3% | 36% |

GE | 8% | 18% |

UAUA | 5% | 32% |

WMT | 10% | 22% |

Now, assume that AMR (American Airlines) is perfectly correlated to UAUA (United Airlines). It would not make sense to hold AMR since it has a lower expected return and higher volatility than UAUA. You may still want to own an airline stock because of its potential diversification benefit to your portfolio, but probably not both if they’re perfectly or highly correlated with one another. In this highly simplified example, Portfolio Monkey would likely exclude AMR from the optimal portfolio and reallocate those funds to other holdings that would provide more value.

Please note that Portfolio Monkey does not take into consideration the tax implications of buying and selling existing holdings. You will want factor that into your decision making process, if applicable.