Monte Carlo Portfolio Simulator¹ |
Signal Rating:
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Annual profit simulation based on four (4) stocks at a time, chosen at random |
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Most Likely Annual Profit ($10k always in the market) : |
$2,800 |
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Probability of Exceeding Breakeven : |
94% |
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S&P 500 Annual Profit ($10k always in the market) : |
$2,897 |
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1 Sigma Profit Est. : |
$4,600 |
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Sharpe Ratio : |
0.8 |
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2 Sigma Profit Est. : |
$6,100 |
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The theory of statistics holds that doubling the number of independent members of an ensemble reduces the standard deviation by the square root of two.
By doubling again, the standard deviation is thus halved. Therefore, trading four stocks in a portfolio will theoretically cut the deviation in half.
This shows up in the performance metrics (above) as the approximate doubling of the Sharpe Ratio versus that of trading one stock at a time.
Note: Hover over a green bar on the barchart for details
¹ Profits are hypothetical based on simulated execution at the next market-on-open after the trading signal.