3-Portfolio Case Presentation

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Feb 20, 2024

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3-Portfolio Case By: Jacob Kutchey

Overall TIme Series Record

Time Series Record Evaluation As we can see from the graph, many of the stocks grew from week one to week six. Portfolio management is critical because it is important to diversify into multiple sectors in the stock market. Diversification is important because if one industry gets hit hard over the six weeks, that portfolio is automatically going to be ruined as there is no other opportunity outside of one sector. It is important to not put all your options in the same hat in case of an emergency. I tried to limit the risk of threat as much as possible because I hate losing money, especially money that can be used elsewhere. Gartner Inc. and Costco were neck and neck for the best week one to week six increase out of all the stocks. Costco ultimately ended up winning by 0.20 cents. Using the graph again, it is apparent that Amazon was the only stock out of the twelve to lose significant value over the six weeks.

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NAME OF SECURITY PRICE WEEK 1 PRICE WEEK 6 GAIN/LOSS Fortinet Inc $50.13 $51.59 $1.46 Nvidia $116.97 $156.39 $39.42 Gartner $278.57 $340.08 $61.51 Targa Resources $65.26 $73.72 $8.46 Apple $140.96 $141.17 $0.21 Amazon $112.29 $92.42 ($19.87) Coca-Cola $55.00 $62.48 $7.48 Costco $467.17 $528.96 $61.79 MKS Instruments $74.65 $78.49 $3.84 Comfort systems USA $104.15 $124.31 $20.16 Sensient Technologies $67.86 $73.51 $5.65 CONTINUED —> Profit/Loss Tracker Per Share

Profit/Loss Tracker Per Share The previous table provides a breakdown of how each stock from the three portfolios looked given a share-to-share basis. Looking at the table, it becomes obvious that portfolio two had the most expensive week yet failed to provide any gain per share. Costco had the largest increase out of every stock at $61.79, but the same portfolio also contained the only stock that lost money. Amazon lost a total of $19.87 per share. This brought down the return on investment a lot for portfolio two. Both, portfolios one and three had two great return stocks and two okay returns. Portfolio three had the cheapest initial investment but came out only 2% behind portfolio one which had an initial investment of $51,153.00, while portfolio three had an initial investment of $42,716.00. Portfolio three had an initial investment of $77,602.00, making it the clear-cut worst share-for-share investment out of the three.

Initial vs. Final Total Gain/Loss Value Portfolio 1 Portfolio 2 Portfolio 3 Initial Value $51,153.00 $77,602.00 $42,776.00 Final Value $62.118.00 $82,443.00 $51,156.00 Gain/Loss $10,965.00 $4,841.00 $8,380.00 Using the following table, we can see the initial and final values of the three portfolios as well as the gain/loss that was had during the six weeks. Portfolio one had the greatest return as it saw a gain of $10,965.00. Portfolio two had the lowest gain with a $4,841.00 increase but had the most expensive initial value. Portfolio three had a nice gain of $8,380.00 while having the lowest initial investment by far.

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ROI, ERR, Variance, Standard Deviation, & Sharpe and Treynor Ratios Portfolio 1 Portfolio 2 Portfolio 3 Return on Investment 22% 6% 20% Variance 172.17 217.26 134.30 Standard Deviation 13.12% 14.74% 11.59% Expected Return 17.91% 2.32% 15.87% Portfolio 1 Portfolio 2 Portfolio 3 Sharpe Ratio 1.41 0.19 1.26 Treynor Ratio 11.35 2.63 13.31 CONTINUED —>

● Return on Investment (ROI) is the overall profitability given the investment. Portfolios one and three have similar ROI, meanwhile, portfolio two failed to break double digits, yet it remains positive. ● Variance is used to measure the degree of risk that an investment presents. The higher the variance, the higher the risk and vice versa. Given that portfolio two had the most expensive initial cost, but fails to have an average ROI and has the highest variance means that it would not be smart to invest in that option given the other two choices. We can see that portfolio three is the best option as it has a similar ROI to portfolio one but has a much lower variance than portfolio one. ● Standard deviation is the measure of volatility. This shows how far prices are from the average price. The higher the standard deviation, the more prices move and vice versa. Once again, this shows that portfolio three is the best investment out of the three portfolios, while portfolio two remains the clear worst. ● Using what we know, Portfolio one had the most ROI but had a higher risk than portfolio three. Portfolio two has the lowest ROI, while obtaining the most risk and widespread prices among the other portfolios. Portfolio three is the clear-cut winner as it still has a great ROI but has a much lower risk and price spread compared to the others. ● The Sharpe Ratio indicates how well we will see the stocks perform verse a risk-free investment, like bonds. The higher the Sharpe Ratio, the better the investment given the risk involved. As we can see, Portfolio two was worse than good as the Ratio is far less than one. Portfolios one and three were considered good investments because they had a ratio above one. ● The Treynor Ratio shows the excess return is referred to as the return earned above the return that could have been earned in a risk-free investment. The higher the Treynor Ratio, the better the investment like the Sharpe Ratio. The portfolio remains the worst investment compared to portfolios one and three.

Conclusion The 3-Portfolio case study was a fun opportunity to break down the stock market and all that goes into building a real-life portfolio. Over the weeks, I have become more comfortable crunching numbers and reading more into the process of picking good stocks to invest in. This project has opened my mind up to the thought of investing more in the market than I already do. I now know about different approaches and management skills that would further increase my chances of being successful in the market. I also learned the skills of calculating different measurables to help indicate whether a stock is worth the risk or if I should pass up on the opportunity of investing in a particular stock. The 3-Portfolio case study was the best project, both fun-wise and educational wise I have done in college. This project alone taught me more than I could have wished for from this class. My biggest takeaway is that no matter who you are, there are strategies and tools to help you be successful in the market.

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