Portfolios: From creation to every-day analytics

Ever wondered what makes a good intro? Me too, but I am a bit uncreative, so being honest and regular is my best bet - TL;TD history lessen:

How have portfolios envolved in the past?

• In 1952, Harry Markowitz's publication of "Portfolio Selection" in the Journal of Finance formalized the concept of diversification and the trade-off between risk and reward in investment portfolios—The Modern Portfolio Theory (MPT).
• Before that, Merrill Lynch offered portfolio management, starting in 1915, but this was much more primitive. Between 1915-1952 these services grew in complexity and were adopted in institutional finance, but lacked substantial innovation or new theses.
• William Sharpe developed the CAPM in the 1960s, followed by the Arbitrage Pricing Theory (APT). Both stand on the ground of MPT, proving the impact of MPT on modern finance.
• Around the same time, Eugene Fama proposed the Efficient Market Hypothesis (EMH), leading to debates about active vs. passive management.
• Passive investing grew substantially as John Bogle founded Vanguard and launched the first index mutual fund in 1975, making passive investing more attractive through cost reductions.
• Due to globalization, new risks and opportunities became relevant. At the same time, starting in the 2000s, computing power became sufficient to launch the first Quant Funds—managing a portfolio no longer required a person at this point.
• The latest developments include ESG integration and adaptation for retail investors, such as quantitative robo-advisors and traders. Not to forget how Large Language Models may impact portfolio decisions now and in the future.

Looking into the future

Let’s get into Palmy’s portfolio manager tool and why you might want to test it straight away. It’s free and feature-rich.

Please consider to create one, following the link as We‘ll go through the creation now, step by step:

https://palmy-investing.com/assets/portfolios/create

Let's get started

Scenario: You share your portfolio with a community, or a friend – How should others see your profile name?

• Anonymized (Blurred and Not Recoverable)
• As is (Your normal profile)

Clicking on the corresponding option is already enough to activate it, seeing “Active” below it. Please don’t worry about the fact that we allow portfolio sharing, it’s absolutely optional, the others will only have read access and you are in full control, as your portfolio tag is a so-called UUID4, which is unpredictable by design (e.g. e6568582-b647-488e-859b-3b2c94975c43).

Step One – Portfolio Basics

Now that you are in General 01, you can give your portfolio an outstanding name. After that, the most important part comes:

• Benchmark
• Risk Free Rate

Select them carefully, Palmy will use their returns as foundation to compute your monthly:

Jensen's Alpha

Small excurse: Jensen's Alpha measures the excess return a portfolio generates over the expected return predicted by the Capital Asset Pricing Model (CAPM), adjusting for market risk (beta). A positive Jensen’s Alpha indicates outperformance relative to the benchmark after accounting for risk, while a negative value signals underperformance.

Calculation Formula

α = ( r( Weighted Portfolio t ) + β ) * ( r(Benchmark t ) - r( Risk Free ) )

Beta

Small excurse: Beta quantifies a portfolio’s sensitivity to market movements, showing how much the portfolio’s returns are expected to change in response to market returns. A beta above 1 means the portfolio is more volatile than the market, while a beta below 1 means it is less volatile; beta is central to risk assessment in CAPM.

Calculation Formula

β = ( r( Weighted Portfolio t ) - r( Risk Free ) ) / ( r( Benchmark t ) - r( Risk Free ) )

Sharpe Ratio

Small excurse: The Sharpe Ratio assesses risk-adjusted return by dividing the portfolio’s excess return (over the risk-free rate) by its standard deviation (volatility). A higher Sharpe Ratio indicates better risk-adjusted performance, helping investors compare portfolios or funds on a standardized basis.

Calculation Formula

Sharpe Ratio = μ( r( Excess Portfolio ) ) / Volatility

Where:
r( Excess p ) = ROI p - r( Risk Free )
r( Excess Portfolio ) = Sum of all r( Excess p )
Volatility = Standard Deviation( r( Excess Portfolio ) )

Omega

Small excurse: Omega is a performance measure that evaluates the probability and magnitude of returns above (versus below) a chosen threshold, considering the entire return distribution. Unlike ratios like Sharpe, Omega accounts for all moments of the return distribution, making it useful for portfolios with asymmetric or non-normal returns.

Calculation Formula

Omega(r) = ∫[r to ∞] (1 - F(x)) dx / ∫[-∞ to r] F(x) dx

Where:
- F(x) is the cumulative distribution function of returns
- r is the threshold return (can be 0, risk-free rate, or custom target)

Step Two – Adding your securities

Here you are able to add previous:

• Bought Stocks
• Bought ETFs

With ease, by selecting the:

• Security through searching it
• Date you’ve bought the security
• Quantity you’ve bought then
• Average price per share

And voilà you’ve set up your initial position(s). Click the “+” symbol to add all of your positions.

Note that Palmy has a very bright stock and ETF coverage, we continually expand. If there is a stock or ETF you miss, get in touch and we’ll add it.

Step Three – Meta

Last, but not least, you must describe your portfolio. Share a thought, so that others you share it to can get an idea of your investment philosophy. Later is also expressed through your own portfolio rating, be honest and assess your portfolio’s overall:

• Diversification
• Geopolitical Robustness
• Power of Innovation
• ESG

From 1-10, where 10 is the maximum. No need to over or underpay here, sharing your portfolio might give you a reality check – as others are then invited to comment on your investments and rate it by themselves.

You might also share your current view on the affected markets by saying you’re bearish, neutral, or bullish – This information will also get attached to your profile page–So be careful :)

Done - Là fin

Now you’ve completed the portfolio creation steps – Fast and straight, we can move on to showcasing you all the features of your portfolio manager.

Now let's get into the every-day analytics you'll get used to when viewing your portfolios:

Opening Your Portfolio

Here is one of the fake portfolios I’ve created to showcase the idea behind it:

As you can see, the first section plots the historical performance – either in absolute USD or percentage – based on your selection. You can always benchmark your portfolio against 188 worldwide indices to see how you’re doing relative to the global markets.

Palmy also integrates a vertical security grid that shows all intraday performances per security at a glance:

Performance Metrics

After the performance over-time section, you’ll see the KPIs section. This is your analytical hub where all your performance metrics are presented, including:

• Jensen's Alpha
• Beta
• Sharpe Ratio
• Omega

Click the bar symbol to review these KPIs over time (PRO feature).

You’ll also see:

• AUM (Assets Under Management), divided into Cash, ETFs, and Stocks
• Performance vs. Risk-Free rate across short-, mid-, and long-term timeframes
• End-of-Day (EOD) Equivalence and Performance
• Portfolio Low and High

The Manager

The positions table allows you to select one or multiple positions and open them in the Manager:

There you can:

• Edit positions (e.g., replace the paid price per share)
• Replace the security (e.g., change MSFT.NE to MSFT)
• Sell the position (partially or fully)
• Remove the position entirely

Selling a position is straightforward – as you can see, all you need to enter is:

• Date of Sale
• Average Price per Share
• Number of Shares Sold

You can sell a partial position (e.g., 1/3 of your Apple shares) without any issue. Palmy handles fractional and tranche-based sales smoothly.

Additionally, you can build watchlists instantly and remove positions added by mistake.

The Sales Book

Palmy tracks all your sales in a dedicated Sales Book. Each sale entry comes with detailed insights. For example:

• P/L net in $: Your total profit or loss in USD (in this case: +111.20 USD)
• P/L per share in $: Profit or loss on a per-share basis (in this case: +5.56 USD/share for AAPL)
• P/L in %: Relative return of your sale (in this case: +2.84%)

Expanded details also include:

• Time Held: Duration the position was in your portfolio
• Sale per Share in $: Average price you sold the shares for
• Buy per Share in $: Average price you originally paid
• Edited/Created: Timestamps of your actions for traceability

Over time, the Sales Book becomes a comprehensive log of your trading history – ideal for analysis, tax reporting, or auditing your decisions.

The Allocation Breakdown

We support your portfolio with an integrated allocation analysis – covering:

• Country Allocation
• Sector Allocation
• Industry Allocation

Starting with country diversification, you’ll see a world map view of your holdings, highlighting your exposure – even at the city level:

Industry and sector allocations are visualized using charts and rankings by portfolio weight. We also highlight sectors or industries that are missing entirely – helping you spot potential diversification opportunities.

Conlusion

I tried my best to highlight the most important parts of the portfolio manager and showed you how to get started quickly - You might find some hidden gems by yourself, so please go ahead and create your portfolio.

Q&A