Portfolio Analysis Tool

Modern portfolio theory proposed by Harry Markowitz is the theoretical foundation for portfolio analysis. Portfolio analysis involves a statistical analysis of available assets, their interrelations and the composition of a combined instrument, which corresponds to maximum risk-return ratio.

Sharpe Ratio as Portfolio Analysis Tool

Portfolio analysis tools help to analyze the strength and weaknesses of the portfolios and to develop asset allocation models based on investors’ objectives and risk preferences. In the framework of the analysis the historical data may be used to estimate the expected returns and the portfolio variance. Modern portfolio analysis tools are effective money management tools that allow investors to achieve their investment objectives.

As an example of such a tool may be considered Sharpe ratio, an analytical approach, suggested by William Sharpe (Nobel Prize, 1990). It is a way of examining the performance of the portfolio by adjusting for its risk. It is considered to be one of the most popular risk/return measures used in finance that is credited to its simplicity. This is a great tool for examining the portfolios and the interrelation of the assets, included in them.

Portolfio Analysis Tool by IFC Markets

IFC Market offers two trading software - NetTradeX trading terminal and MetaTrader 4 platform. NetTradeX trading terminal is equipped with the unique PCI technology that allows creating portfolios of various degrees of complexity. Investors can create portfolios from financial assets of various categories, such as currency pairs, CFDs on stocks, indices and commodity futures and many more. After creating these instruments, it is possible to analyze it and start trading. For analyzing purposes various technical analysis tools may be used, that are available in the platform. Surely, Sharpe ratio may be used too, since it is a good tool for creating a portfolio with high returns and low risks. Another method of analysis is the examination of the historical performance of the included assets that are important to find interrelation between the assets.

PCI technology has been developed in a way to provide investors with the highest possible mobility, that is why they can give an individual weight to the assets of the portfolios and they can combine instruments from different financial spheres. The analysis of the portfolios may be performed both by technical analysis tools and separate financial methods, depending on the investor's knowledge and preferences.

IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS and Android. You may compare the advantages of both platforms.