Portfolio Analysis

What is Portfolio Analysis

Portfolio analysis is the process of evaluating the performance and risk of a portfolio of investments. It involves examining the individual investments in the portfolio, as well as the overall mix of investments, in order to understand the portfolio's risk and return characteristics.

There are several different methods that can be used to analyze a portfolio, including:

• Diversification analysis: This involves examining the portfolio's exposure to different asset classes, sectors, and geographical regions in order to assess the portfolio's diversification.
• Performance analysis: This involves evaluating the portfolio's historical performance and comparing it to benchmark indices or other relevant benchmarks.
• Risk analysis: This involves assessing the portfolio's risk profile, including measures such as volatility and beta.
• Asset allocation analysis: This involves examining the portfolio's allocation across different asset classes in order to understand the portfolio's risk and return characteristics.

Portfolio analysis can be a useful tool for investors who want to understand the risk and return characteristics of their investments, as well as for investment professionals who are responsible for managing portfolios on behalf of their clients. It can also be useful for identifying areas of the portfolio that may be underperforming or overperforming, and for making informed decisions about how to adjust the portfolio in order to optimize its risk and return profile.

See Also

• Project Portfolio Management (PPM)
• Application Portfolio Management (APM)