# Optimize risk and return with premium portfolio analytics

Get deeper portfolio insights with premium portfolio analysis tools. Evaluate portfolio performance and key characteristics including risk tolerance, valuation, and diversification. Monitor risk and exposure metrics to see where you’re over- or underexposed to actively rebalance your positions. Head to the **My Portfolio** page to select tabs with a "+" symbol.

## Performance

### Track portfolio performance over time

- Compare your performance in relation to market movements.
- View detailed portfolio allocation over time in list or heat map view.
- Create model portfolios to evaluate your performance against personal goals.

### How performance is calculated

- Performance tracking is available to users with a portfolio on Yahoo Finance. Portfolios can be created automatically through linked brokerage or manually by entering trade dates and cost basis for each security.
- Users with a portfolio can track their performance from January 2018 onwards. Our performance measuring methodology assumes that your portfolio is always 100% invested. If trade dates are missing then we assume that positions have been invested since January 2, 2018. If no cost basis is provided, we calculate the transaction value based on that day’s open price.
- We use a time weighted return methodology that currently assumes a “Buy and Hold” investment strategy. If you sold some stocks and deleted those transactions, contributions to returns from those transactions will not be reflected in the historical performance numbers.

## Risk Analysis

View key risk indicators for your portfolio over time and against the market. Proactively rebalance your portfolio according to your risk appetite.

### Alpha

Alpha is a measure of performance and describes a stock’s ability to beat the market. It’s often considered the active return on an investment and gauges the excess return of an investment relative to the return of a benchmark index. Alpha may be positive or negative.

### R-squared

- R-squared is the percentage of a security's movements that can be explained by movements in its benchmark index.
- An R-squared of 100% means that all movements of a security are completely explained by movements in the index.
- R-squared is always between 0 and 100%. 0% indicates that the model explains none of the variability of the response data around its mean. 100% indicates that the model explains all the variability of the response data around its mean.

### Beta Trend

- Zero indicates no correlation with the overall market (e.g. cash or treasury bills).
- One indicates a stock has the same volatility as the market.
- Greater than one indicates the stock is more volatile than its benchmark.
- Less than one indicates the stock is less volatile than its benchmark.

**Example** - A stock with a beta of 1.3 is 30% more volatile than its benchmark.

### Correlation

- Correlation is a statistic that measures the degree to which two securities move in relation to each other. The correlation coefficient for advanced portfolio management has a value that must fall between -1.0 and +1.0.
- A perfect positive correlation (+1.0) means that two assets move lockstep in the same direction.
- A perfect negative correlation (-1.0) means that two assets move in directly opposite directions.
- A zero correlation implies no relationship at all.

**Example** - Large-cap mutual funds generally have a high positive correlation to the Standard and Poor's (S&P) 500 Index - very close to 1. Small-cap stocks also have a positive correlation to that index, but it is not as high - generally around 0.8.

### Sharpe Ratio

The Sharpe ratio was developed by Nobel laureate William F. Sharpe and is used to help investors understand the return of an investment compared to its risk. The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Subtracting the risk-free rate from the mean return allows an investor to better isolate the profits associated with risk-taking activities. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

### Volatility and Standard Deviation

- Volatility is measured using the standard deviation in a stock’s price change against its average price.
- Standard deviation is defined as the square root of the average variance of the stock price from its mean.
- Standard deviation values are dependent on the price of the underlying security. Securities with high prices will have higher standard deviation values than securities with low prices. These higher values are not a reflection of higher volatility, but rather a reflection of the actual price.
- Standard deviation values provide an estimate for expected price movements. Price moves greater than the standard deviation show above average strength or weakness.

## Characteristics

### Value metrics for your portfolio

**Price/Earnings Ratio**- The current market price of a company share divided by the earnings per share of the company.**Dividend Yield**- The ratio of a company’s annual dividend expressed as a percentage of the current share price.**Market Cap**- The market value of a publicly traded company's outstanding shares, equal to the share price multiplied by the number of shares outstanding.**Price/Book Ratio**- The market value of a company, or its share price multiplied by the number of outstanding shares, compared to the book value, its net assets.**Price/Cash Flow Ratio**- A stock valuation indicator or multiple that measures the value of a stock's price relative to its operating cash flow per share. The ratio uses operating cash flow which adds back non-cash expenses such as depreciation and amortization to net income.**EPS Growth**- The percentage change in normalized earnings per share over the previous 12 month period to the latest year end, illustrating the rate at which a company has grown its profitability.