Seeking top core stocks from investors who participate in the Growth Forum, the following analysis shows portfolio projections, the correlations within the portfolio, and the "Delta Stock" projections.
QPP Analysis: Nearly equal percentages are assigned to each stock. The analysis spans five years and the S&P 500 is projected to grow 7.0% per year over the next few years. Readers familiar with this type of analysis see the 9.6% projected return, but one pays for that relatively high return with a rather high 17.4% projected standard deviation. Even though we hold lots of stocks, the Diversification Metric falls short of our intended goal of 40%. As William Bernstein points out, it now requires approximately 100 stocks to build a diversified portfolio due to the high correlations with each other.
This portfolio outperformed the S&P 500 by more than double over the last five years and accomplished this feat with lower volatility -- not by much, but the risk was a tad lower. That is an excellent record.
Correlation Matrix: Now we want to witness how these stocks are correlated when placed in a portfolio. Stocks and the ETF VTI are highly correlated when the background is yellow. A white background indicates a modest correlation, and low correlated stocks have a blue background. Of course, it is better to have an 81% rating rather than a 97% ranking even though both fall into the high correlation classification. Take a moment to look over the correlations. I did not include how each stock is correlated with each other as the screenshot is too wide to fit on the page.
Delta Factor Projections: And now we come to the Delta Factor projections. Based on the above allocations, which stocks are projected to do well over the next six to12 months and which carry a higher risk? I've found the best opportunities are when the Delta Factor indicates a Buy and the background color in the Delta column is green. No investment is showing both signals -- not surprising with this high market. However, there are a number of stocks that show promise over the next few months, something hard to find within ETFs.