Quiz on Portfolio Theory, building blocks
Zac Cassidy
4/10/2018
Consider a portfolio with four stocks - Apple, Microsoft, Facebook and Tesla during the two-year period between the beginning of 2016 and the end of 2017. You want to find how much you would have made if you invested $1 million at the beginning of the given period. Find the answer by revising the given code and by answering the five questions.
Q1 Which of the four stocks performed the best on the day of 2017-12-28?
-Tesla Preformed the best due to their 0.01193675 return being significantly larger than any other company on that day.
## [1] "AAPL" "MSFT" "FB" "TSLA"
## NULL
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2016-01-04 223.41 101.01418 51.92759 102.22
## 2016-01-05 223.43 98.48284 52.16449 102.73
## 2016-01-06 219.04 96.55557 51.21690 102.97
## 2016-01-07 215.65 92.48048 49.43544 97.92
## 2016-01-08 211.00 92.96949 49.58706 97.33
## 2016-01-11 207.85 94.47488 49.55863 97.51
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2016-01-04 223.41 101.01418 51.92759 102.22
## 2016-01-05 223.43 98.48284 52.16449 102.73
## 2016-01-06 219.04 96.55557 51.21690 102.97
## 2016-01-07 215.65 92.48048 49.43544 97.92
## 2016-01-08 211.00 92.96949 49.58706 97.33
## 2016-01-11 207.85 94.47488 49.55863 97.51
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2017-12-21 331.66 174.2994 85.10024 177.45
## 2017-12-22 325.20 174.2994 85.11020 177.20
## 2017-12-26 317.29 169.8774 85.00071 175.99
## 2017-12-27 311.64 169.9073 85.30926 177.62
## 2017-12-28 315.36 170.3853 85.31921 177.92
## 2017-12-29 311.35 168.5428 85.14006 176.46
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2016-01-04 NA NA NA NA
## 2016-01-05 8.947227e-05 -0.025059273 0.0045620639 0.004989258
## 2016-01-06 -1.964821e-02 -0.019569582 -0.0181654225 0.002336202
## 2016-01-07 -1.547662e-02 -0.042204679 -0.0347825815 -0.049043439
## 2016-01-08 -2.156269e-02 0.005287754 0.0030670100 -0.006025286
## 2016-01-11 -1.492888e-02 0.016192258 -0.0005733552 0.001849378
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2017-12-21 0.00814637 0.003785477 -0.0002338459 -0.002473450
## 2017-12-22 -0.01947775 0.000000000 0.0001169914 -0.001408848
## 2017-12-26 -0.02432350 -0.025369949 -0.0012864381 -0.006828397
## 2017-12-27 -0.01780703 0.000175868 0.0036300285 0.009261833
## 2017-12-28 0.01193675 0.002813552 0.0001166227 0.001689016
## 2017-12-29 -0.01271556 -0.010813631 -0.0020998084 -0.008205885Q2 What’s portfolio return on the day of 2017-12-28? Interpret.
-The portfolios return was 0.004139086 (.41%). This is a small return but is most likely because large companies such as these are more established and their stocks less risky.
## portfolio.returns
## 2016-01-05 -0.0038546196
## 2016-01-06 -0.0137102452
## 2016-01-07 -0.0354267785
## 2016-01-08 -0.0049659849
## 2016-01-11 0.0005346121
## 2016-01-12 0.0132536347
## portfolio.returns
## 2017-12-21 0.0021024580
## 2017-12-22 -0.0047335246
## 2017-12-26 -0.0142099659
## 2017-12-27 -0.0004807838
## 2017-12-28 0.0037956019
## 2017-12-29 -0.0083187855
## portfolio.returns
## 2016-01-05 -0.0038546196
## 2016-01-06 -0.0137102452
## 2016-01-07 -0.0354267785
## 2016-01-08 -0.0049659849
## 2016-01-11 0.0005346121
## 2016-01-12 0.0132536347
## portfolio.returns
## 2017-12-21 0.002389625
## 2017-12-22 -0.005404079
## 2017-12-26 -0.014577550
## 2017-12-27 -0.001300070
## 2017-12-28 0.004139086
## 2017-12-29 -0.008449070
Q3 Which of the two strategies would have netted a bigger return?
# -The rebalanced monthly portfolioQ4 Which of the four stocks performed the best during the study period? Hint: See the performance of the buy-and-hold portfolio.
# -Facebook Preformed the best during the study period.Q5 Which of the four stocks performed the best during the last month of the study period? Hint: See the performance of the rebalanced portfolio. Note that the portfolio is rebalanced monthly.
# -Tesla has preformed the best in the last month.## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2016-01-05 0.2509898 0.2446783 0.2521123 0.2522195
## 2016-01-06 0.2494788 0.2432247 0.2509735 0.2563230
## 2016-01-07 0.2546387 0.2415156 0.2511411 0.2527046
## 2016-01-08 0.2503914 0.2440044 0.2531686 0.2524355
## 2016-01-11 0.2465216 0.2478229 0.2528882 0.2527672
## 2016-01-12 0.2457786 0.2481310 0.2518710 0.2542194
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2017-12-21 0.2254482 0.2620413 0.2488794 0.2636310
## 2017-12-22 0.2221084 0.2632876 0.2500923 0.2645117
## 2017-12-26 0.2198297 0.2603070 0.2533710 0.2664923
## 2017-12-27 0.2160190 0.2604780 0.2544131 0.2690899
## 2017-12-28 0.2177710 0.2602232 0.2534806 0.2685252
## 2017-12-29 0.2168055 0.2595685 0.2550702 0.2685558
## [1] 1 1 1 1 1 1
## [1] 1 1 1 1 1 1
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2016-01-05 0.2509898 0.2446783 0.2521123 0.2522195
## 2016-01-06 0.2494788 0.2432247 0.2509735 0.2563230
## 2016-01-07 0.2546387 0.2415156 0.2511411 0.2527046
## 2016-01-08 0.2503914 0.2440044 0.2531686 0.2524355
## 2016-01-11 0.2465216 0.2478229 0.2528882 0.2527672
## 2016-01-12 0.2457786 0.2481310 0.2518710 0.2542194
## TSLA.Adjusted AAPL.Adjusted MSFT.Adjusted FB.Adjusted
## 2017-12-21 0.2613060 0.2478090 0.2471796 0.2437054
## 2017-12-22 0.2576084 0.2491555 0.2485517 0.2446843
## 2017-12-26 0.2550607 0.2464267 0.2519041 0.2466085
## 2017-12-27 0.2508449 0.2467909 0.2531476 0.2492165
## 2017-12-28 0.2527928 0.2464651 0.2521336 0.2486085
## 2017-12-29 0.2517051 0.2458774 0.2537481 0.2486694
## [1] 1 1 1 1 1 1
## [1] 1 1 1 1 1 1