Portfolio Analysis

Portfolio Analysis

 

What is Portfolio Analysis?

Portfolio analysis involves quantifying the operational and financial impact of the portfolio. It is vital to evaluate the performances of investments and timing the returns effectively.

The analysis of a portfolio extends to all classes of investments such as bonds, equities, indexes, commodities, funds, options and securities. Portfolio analysis gains importance because each asset class has peculiar risk factors and returns associated with it. Hence, the composition of a portfolio affects the rate of return of the overall investment.

Definition of a Portfolio Analysis

Portfolio analysis is the process of looking at every investment held within a portfolio and evaluating how it affects the overall performance. Portfolio analysis seeks to determine the variance of each security, the overall beta of the portfolio, the amount of diversification and the asset allocation within the portfolio.
The analysis seeks to understand the risks associated with the current composition of the portfolio and identify ways to mitigate the identified risks.

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