Your objective is to outperform S&P 500. Draft a report that outlines the performance of your portfolio to that of S&P 500 for the period ending on August 06, 2021 (or close to it)
[Note: I did NOT outperform the S&P 500]
*Length Guideline: three double-spaced pages, plus a page citing your references and few pages for appendix *
Source Material – Feel free to use sources of your own choosing to supplement your article.
Summary:
•Include in your paper a brief outline of the performance of your portfolio against S&P 500.
•Compare your performance on raw return as well as on risk adjusted basis, such as: Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha. To do this, you must start with the daily value of your portfolio as well as that of S&P 500. Compute the daily return of your portfolio as well as that of S&P 500, **run a regression**, and take note of the alpha and the beta of the portfolio returns.
(You can include the two graphs and the regression output in the body of the paper.)
**Body of the paper: Write your paper in a simple narrative format while addressing the following points:**
1) How many transactions did you place?
How did your portfolio perform against S&P 500?
What do you think led to your portfolio under/over-performing the benchmark?
What instruments did you trade, and can you mention market events that contributed to how your portfolio performed? [note: I based my market events impacted by COVID-19] It doesn’t have to be transaction by transaction analysis; overview of your trading and mention of major events would suffice.
What lessons did you learn while managing your portfolio and what would you do differently? [ to NOT invest into “Meme-Stocks” and take stock-trading seriously by investing into better stocks- feel free to add your opinion]
2) Additional points:
– Calculate the daily and annualized return and risk of your portfolio as well as that of the benchmark (S&P 500).– (or close to it at least)
– Plot daily market value of your portfolio for the trading period. (anything *Close* will suffice)
– Plot a graph that compares the cumulative return of your portfolio to that of the benchmark.
– Evaluate the performance of your portfolio to that of the benchmark using different performance evaluation metrics, such as: Sharpe ratio, Treynor ratio and Jensen’s alpha.
– When you use different performance metrics to evaluate the performance of your portfolio, take time to explain what those metrics mean how they could be interpreted. Make sure to cite sources (if need be)
To Writer: Please let me know if you need any more additional sources or materials! — I can provide them to you instantaneously. Also, numbers don’t have to be precisely accurate but close-to-accurate.
Attached is the following:
– Examples of the stock market investments – Performance Evaluations
– CSV. (Excel-files) are my personal stock market trades/performance
– Summary of my stock investment & S&P 500 vs My performance is my performance as well
This report consists of activity level, allocation of funds, and overall performance in the period under study. Having one million dollars initial capital, I created 5.82% return over a period of 140 days. Finally I outperformed the S&P 500; my portfolio had a position in the top 10 of portfolio values among classmates for a long period of time. However, as a result of bad decisions I am completing this analysis with the 35th highest-ranking portfolio missing on the top twenty by 2 percent. This report summarizes the history of transaction from the beginning of the analysis on the 29th of June to end of the analysis on the 6th of August 2013.
My investment is indicated below. However there is a brief description of the main points and investment techniques I was supposed to follow throughout the period under research. On the onset, my aim was to outperform the benchmark of Standard and poor’s 500 industrial average by 2.5% all over the portfolio life (Alareeni & Hamdan, 2020). The reasons as to why I selected S&P 500, amongst other benchmarks, was because of the idea that I was planning to invest in a business that had been affected by the 500 companies making up this index. The ability to compare my investment alternatives against that of composite corporations, which I would have chosen to make investment into, was a major way of indicating that the performance of my portfolio against those of the market was top notch. Finally, I wasn’t able to attain my goal of outperforming the S&P 500 by 2.5%. However, I out-competed the index by 1.61% across the 140 days of trading. Based on the investment policy, I was allowed to make an investment which was greater than 10% of my basic portfolio value. In only a single occasion is when I was able to break this policy, by overpayment of a call option for LinkedIn.
On the other hand, long stocks which I had to hold for a minimum period of one week. In relation to my portfolio allocation value between futures, options and common stock, I decided to select a 40% allocation rate towards futures and options. Finally, I saw that it was difficult to keep investing in futures and derivatives. Majority of the stocks that I found value in investing in had options with very high prices for an investment level which I needed to make. This made it less appealing to continue investing in options. In regards to the futures, immediately after writing and submitting my work I decided to veer away from the commodities market because of the volatility of the market over the period of 140 days and I was not so familiar with the commodity market. In strategic terms, I was looking to make an investment in companies that were likely to grow across all main marketplaces. Additionally, during the month of October and early November, majority of the companies were releasing their quarterly earnings reports. This appeared to be incredibly appealing to me being an investor since over the weeks before and after earnings were made public; the stocks of individual companies became a lot more volatile. Therefore, finally having a presence as an investor in these potentially high growth markets was an important element to my asset portfolio.
My true portfolio allocation of resources was not entirely as I had planned initially. Unfortunately, I did not invest 40% of my initial portfolio value in futures and options; I was only able to invest approximately 29% of my initial value of portfolio in Futures and Options. In regards to equities, 29% of my initial value of portfolio futures and options. In regards to short term equity, approximately 32% of my basic portfolio value was allocated to short selling equities. Out of my basic portfolio value, approximately 60% had been invested in long term equities. In relation the industry that I ventured into, technology was my choice. This is because of the current market volatility in comparison to the rest of the industries (Yilmazkuday, 2020).
My portfolio performed averagely throughout the 140-days period of investment. I wasn’t able to outperform the S&P 500 by the end of the 140 week period. My portfolio was giving returns which were closely equal to that of S&P from mid-June to mid-July, but as the S&P 500 started to rise the returns on my portfolio also began to rise. My portfolio was able to hit the peak in value almost at the end of October when I had made approximately & 150 thousand of apple and Tesla options, which placed me well above S&P. However my portfolio value started too declined greatly when I made the quick decision to buy the LinkedIn call option with shorter dates to expiry (Jiang et al., 2019). This resulted to the price of the options to be high because when the risk which I was willing to absorb as a result of the fact that analysts had made prediction that the stock price of LinkedIn would increase when quarterly earnings were released. However, this was not the case because LinkedIn announced a net loss for the quarter and the price of its stock took a dramatic tumble which resulted in my loss of an upward trajectory of 100,000 with only one week left to my option.
References
Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance: The International Journal of Business in Society.
Jiang, C., Du, J., & An, Y. (2019). Combining the minimum-variance and equally-weighted portfolios: Can portfolio performance be improved?. Economic Modelling, 80, 260-274.
Yilmazkuday, H. (2020). COVID-19 effects on the S&P 500 index. Available at SSRN 3555433.
Appendix
Five days: S&P 500 performance.
Comparison between Apple and S&P performance from June 06, 2020 to August 07, 2020
Performance analysis of Tesla, Apple and S&P 500
Performance analysis of Apple, Tesla, Apple and Vapor group and S&P 500
