Gsphere has the flexibility to compare any portfolio to any portfolio. You can compare the same portfolio over different time periods, various versions of the same holdings optimized with different settings or contrast a prospect’s holdings to a recommended model. Whenever looking at a client facing comparison, it is critical to make those comparisons apples to apples. Apples to apples can be either historical or forward looking, however we suggest that historical is a more definitive approach. Our SaaS technologies do this automatically, but in the desktop application we need to follow these 3 simple rules.
1. Use the same time period
2. Use the same correlation calculation option
3. No editing or shrinking the risk and return data
These 3 simple rules will provide for fair apples to apples comparisons. However, because these tests do not account for investment selection process or re balancing actions we recommend limiting the backtests to shorter periods. I like to use 3 year tests because a portfolio is tested in both bull and grievous bear markets.