Row 56936

Row ID: 56936 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 56936 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

I'll not comment on the individual stocks since you said you researched them and are happy with the selection.

To check diversification you can use a tool that shows all correlations between individual investments. I use Diversiview (diversiview.online) but there may be others as well.

As you would expect, there is a high correlation (0.74) between AAPL and MSFT, and similar between KO and PEP. The rest are positive but lower (under 0.5). Why are correlations important? because they come into play when you calculate the total risk you take (portfolio volatility) for the return you expect - that has to match your risk tolerance if you want to sleep well at night.

You can improve (lower) the total risk you take by trying to find good investments (good expectation of returns) that are not correlated (correl coefficient = 0 or around 0), or negatively correlated (negative correl value) since together they will give a good total return while you would take less risk. Asset allocation also matters but it's another story ..

I hope this makes sense and helps.

FieldValue
text I'll not comment on the individual stocks since you said you researched them and are happy with the selection. To check diversification you can use a tool that shows all correlations between individual investments. I use Diversiview (diversiview.online) but there may be others as well. As you would expect, there is a high correlation (0.74) between AAPL and MSFT, and similar between KO and PEP. The rest are positive but lower (under 0.5). Why are correlations important? because they come int…
label r/investing
dataType comment
communityName r/investing
datetime 2024-05-23
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Raw Record

{
  "text": "I'll not comment on the individual stocks since you said you researched them and are happy with the selection. \n\nTo check diversification you can use a tool that shows all correlations between individual investments. I use Diversiview (diversiview.online) but there may be others as well. \n\nAs you would expect, there is a high correlation (0.74) between AAPL and MSFT, and similar between KO and PEP. The rest are positive but lower (under 0.5). Why are correlations important? because they come into play when you calculate the total risk you take (portfolio volatility) for the return you expect - that has to match your risk tolerance if you want to sleep well at night. \n\nYou can improve (lower) the total risk you take by trying to find good investments (good expectation of returns) that are not correlated (correl coefficient = 0 or around 0), or negatively correlated (negative correl value) since together they will give a good total return while you would take less risk. Asset allocation also matters but it's another story ..\n\nI hope this makes sense and helps.",
  "label": "r/investing",
  "dataType": "comment",
  "communityName": "r/investing",
  "datetime": "2024-05-23",
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