Risk/Return POA – Dr. Dividend’s Positions

Based upon the Portfolio Optimization Algorithm (POA) discussed earlier and the relevant POA QC analysis and comparisons, let’s look at the current stock positions suggested by Dr. Dividend (DD).

Let’s define the following POA parameters:

benchmark_ = [“^GSPC”,]
portfolio_ = [‘AAPL’, ‘GOOG’, ‘COST’, ‘SBUX’, ‘DE’,’SOFI’,’APD’,’UNH’,’SHW’,’NVDA’]

start_date_ = “2021-01-01”
end_date_ = “2022-10-05”
number_of_scenarios = 10000

trade_days_per_year = 252

delta_risk = 0.1

We read the input stock data

Dr. Dividend's input stock data table

The POA output is as follows:

DD portfolio scenarios & best performer vs market proxy values
DD portfolio scenarios & best performer vs market proxy values
Stock % in DD Portfolio
Stock % in DD Portfolio

It is clear that

  • the DD best performer offers a similar risk level as the market proxy
  • the relatively low DD risk level is well within the expected boundaries
  • Return(DD) ~ +18% while Return(^GSPC) ~-0.5%.
  • The optimized DD portfolio may exclude UNH, AAPL, and SOFI stocks.

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