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Rebalancing is a sophisticated tool to help you rebalance your portfolio as well as perform explicit trade planning. The facility is available by going to Portfolio Tools and selecting Rebalancing as shown in the screenshot below.
The tool is also available under Portfolio Manager as shown in the screenshot below.
Portfolio rebalancing allows you to set desired allocations for stocks in your portfolio by percentage. You can also set a drift tolerance, which is how much you are willing allow your portfolio stray from your desired allocations. Stock Rover will then show you what is out of balance and by how much, as well as the trades you need to make to get back in balance.
To learn more about rebalancing, be sure to check out our blog post Rebalancing Your Portfolio.
The rebalancing facility in Stock Rover also facilitates trade planning. Trade planning is done by switching the planning mode to quantity. You can then make changes to the quantities held for various positions in your portfolio. You can also add new tickers or eliminate positions.
Both rebalancing and trade planning allows you to test potential trades. Based on your planning input, an alternative version or model of your portfolio is created. You can then compare the planned or model portfolio against your actual portfolio across number of key analytics such as historical return, maximum drawdown, risk adjusted return vs. the S&P 500, correlation with the S&P 500, beta, volatility, and the Sharpe ratio.
You will also be able to see the difference in aggregate financial measures for the actual vs. planned portfolio for such things as Price/Earnings, Price/Book and Price/Sales, as well as aggregate dividends and dividend yields. You will also be able to examine differences in the sector allocations of the actual vs. planned portfolio.
The goal of the rebalancing facility is to assist you in making intelligent changes to your portfolios to achieve your investment objectives by demonstrating how potential trades affect the portfolio across many different factors.
With ‘Plan By %’ selected as highlighted in the screenshot the ‘Planned Value %’ column becomes editable. You can enter the desired percentage for each position in your portfolio as shown in the screenshot below.
Once the percentages are entered, it will highlight the changes. A green row indicates you would need to add shares to get to the target percentage. A red row indicates that you would need to reduce shares. Uncheck the ‘Highlight Changes’ box if you’d like to remove row coloring. In either case the Planned Trade and the Planned Cost columns will indicate the number of shares needed and the amount to trade to get there.
With ‘Plan By Quality’ selected as highlighted in the screenshot the ‘Planned Quantity’ column becomes editable. You can enter the desired quantities for each position in your portfolio as shown in the screenshot below.
Once the quantities are entered, it will highlight the changes. A green row indicates you would need to add shares to get to the target quantity. A red row indicates that you would need to reduce shares. Uncheck the ‘Highlight Changes’ box if you’d like to remove row coloring. In either case the Planned Trade and the Planned Cost columns will indicate the number of shares needed and the amount to trade to get there.
With ‘Plan By Value’ selected as highlighted in the screenshot the ‘Planned Value’ column becomes editable. You can enter the desired value for each position in your portfolio as shown in the screenshot below.
Once the values are entered, it will highlight the changes. A green row indicates you would need to add shares to get to the target value. A red row indicates that you would need to reduce shares. Uncheck the ‘Highlight Changes’ box if you’d like to remove row coloring. In either case the Planned Trade and the Planned Cost columns will indicate the number of shares needed and the amount to trade to get there.
To add a ticker to the planned portfolio, click ‘Add Ticker’ in the top right. To remove any tickers, you can click the ‘x’ next to the ticker name. See screenshot below.
This is the window that appears after clicking ‘Add Ticker’, here you can enter the ticker or bring up the search for a ticker by starting to type in the ticker box.
Under the More pull down there are options where you can make adjustments to multiple tickers in the portfolio. Change % Multiple Tickers allows you to make % changes to several tickers at a time.
Allocate Equal Weight to Each Position allows you to enter an equal weight to each position. See screenshots below.
Allocate Equal Weight with in Sectors allows you to enter a percentage to an entire sector. Within the sector, each position will have an equal weight. See screenshots below.
Change Cash % and Adjust Positions allows you to enter the cash percentage you desire for the portfolio. Then each position will be adjusted proportionally to achieve the desired cash position. See screenshots below.
Save the Model as a New Portfolio allows you to save the changes you made to your model as a new portfolio. The screenshots below illustrates this feature.
After selecting this option, a window is rendered where you can specify the name of your portfolio and can enter the Buy Date for the portfolio. The Buy Date you select is used to establish the cost per share of the positions in the portfolio based on the prices of the tickers in the portfolio on that date. The default is the current date.
Please note the new portfolio does not receive the history of the original portfolio.
In the top right hand corner of the Holdings tab, you do have the ability to Reset the Portfolio. Resetting the portfolio means the model will be deleted, which will result in the actual and planned values becoming the same.
The import option allows you to import holdings from a file. You also have the ability to print or export the planned portfolio.
With Multiple Portfolios checked you have the ability to select multiple portfolios and view the holdings. However no changes can be made as the quantities are aggregated across portfolios.
The drift tolerance is the percentage change or drift from ideal that you will allow before executing a rebalancing trade to bring the portfolio back into balance. For example, if you have a balanced target allocation of 10% for a position, and if it currently has a 12% allocation, then the drift is 2% from ideal. If your drift tolerance was set to 3, portfolio rebalancing would not plan a trade. However if the drift tolerance was set to 1, a trade would be planned to get back to the balanced percentage.
As you make changes to the planned portfolio under the Holdings tab, the data under the Analytics tab will update as you change the planned quantities to show comparison between your actual portfolio and your planned portfolio. The analytics are calculated over the selected time period. Historical Return shows what your return would have been if you’d made trades at the beginning of the selected time period. The next set of metrics use data from the selected time period to calculate risk in various ways, and compare that to those same metrics had the trades been executed at the beginning of the time period. The time period can be adjusted in right hand corner
Also in the right hand corner is the ability to reset the portfolio, print it or export it.
As you make changes to the planned portfolio under the Holdings tab, the data under the Metrics tab will update to reflect the differences between your actual portfolio and your planned portfolio for key portfolio statistics such as Price to Earnings, Price to Book, Earnings Growth and Dividends.
As highlighted in the top right hand corner, you can also reset, print or export the portfolio.
The sectors tab shows the cash position as well as the sector breakdown for the actual portfolio vs. the planned portfolio. Please note if you own ETFs or funds, the sectors will be populated with the ETF/fund sector holdings. As shown in the screenshot below you can sort on any of the columns. The top right hand corner also gives you the ability to reset, print or export the portfolio.
The Portfolio Allocation tab displays the allocation by equity type for the actual portfolio vs. the planned portfolio. If you click on a particular piece of the pie you can drill down to see further breakdown of the portfolio.
After clicking on a piece of the pie, it will break it down further, by sector, funds or ETFs.
There is a additional drill down if you click on a sector in the pie chart where it will show the stocks from that sector.
