# Load packages

# Core
library(tidyverse)
library(tidyquant)

Goal

Collect individual returns into a portfolio by assigning a weight to each stock

Choose your stocks.

from 2012-12-31 to 2017-12-31

1 Import stock prices

symbols <- c("COST", "LMT", "ADBE", "LLY", "ADP")

prices <- tq_get(x   = symbols, 
                 get = "stock.prices",
                 fro = "2012-12-31",
                 to  = "2017-12-31")

2 Convert prices to returns (quarterly)

asset_returns_tbl <- prices %>%
    
    group_by(symbol) %>%
    
    tq_transmute(select     = adjusted,
                 mutate_fun = periodReturn,
                 period     = "quarterly",
                 type       = "log") %>%
    
    slice(-1) %>%
    
    ungroup() %>%
    
    set_names(c("asset", "date", "returns"))

3 Assign a weight to each asset (change the weigting scheme)

symbols <- asset_returns_tbl %>% distinct(asset) %>% pull()
symbols
## [1] "ADBE" "ADP"  "COST" "LLY"  "LMT"
weights <- c(0.4, 0.25, 0.2, 0.1, 0.05)
weights
## [1] 0.40 0.25 0.20 0.10 0.05
w_tbl <- tibble(symbols, weights)

4 Build a portfolio

portfolio_returns_tbl <- asset_returns_tbl %>%
    tq_portfolio(assets_col = asset, 
                 returns_col = returns,
                 weights = w_tbl, 
                 rebalance_on = "quarters")

5 Plot: Portfolio Histogram and Density

portfolio_returns_tbl %>%
    
    ggplot(mapping = aes(x = portfolio.returns)) +
    geom_histogram(fill = "green", binwidth = 0.01) +
    geom_density() +
    
    # Formatting
    scale_x_continuous(labels = scales::percent_format()) +
    
    labs(x = "Quarterly Returns",
         y = "Frequency",
         title = "Portfolio Histogram & Density")

What return should you expect from the portfolio in a typical quarter?

In this portfolio, investors should expect a quarterly return of just under 4%. This is shown in the histogram and density plot above, as we see on four occasions it has returned a percentage just below 5%. The average return, found by the summarise function is 5.74%. If each quarter were to return a percentage of that nature, they would significantly beat historical annual returns of the S$P 500. On a few occasions a quarterly return has exceeded 10%, but there is not enough evidence to show that this result has a high chance of happening.