Portfolio Charts Risk/Return Chart Tutorial

The risk/return chart on Portfolio Charts allows you to compare portfolios beyond the typical metrics, with five ways of showing each, including my favorites. I walk you through how to use this tool, what it can tell you, what it can’t, and some next steps for individual investors.

Here is an eighteen minute tutorial on how to use the Risk/Return Chart at Portfolio Charts. This tool allows you to compare your own portfolio with 18 preset portfolios (incl. the Golden Butterfly, the Permanent Portfolio, the Classic 60/40, etc.) in terms of risk and reward. More than just the typical metrics of standard deviation and average return, though, this tool allows you to use five metrics for risk and five for reward, including my personal favorites of the Ulcer Index and Perpetual Withdrawal Rate. It's a great tool for individual investors to test out their portfolio ideas!

One of the metrics in the tool is Ulcer Index, a highly intuitive metric that gives investors a sense of how stressful portfolio declines might be. I wrote more about it, and why I think its more helpful than standard deviation, here:

Risk Parity Concepts: the Ulcer Index
Downturns can happen in two directions: depth and length. Both types matter, and the Ulcer Index (UI) is a fantastic metric to intuitively explain the extent of a portfolio downturn. Unsurprisingly, RP portfolios are less stressful than their traditional counterparts, as measured by UI.

Lastly, if you have any tutorials you'd like to see, don't hesitate to let me know! My email address is riskparitychronicles@gmail.com.