Thursday, June 09, 2011

Using Google Finance to visually back-test portfolio performance

We've recently discovered that one of the under-appreciated features of Google Finance is it's ability to graph the results of your custom portfolio -- AND compare (graphically/visually) the performance of your portfolio to other indices, etfs, stocks, etc.

Here's how:

First you must create a portfolio on Google Finance. According to Google's instructions, to create a Google Finance portfolio you first need to create a Google Account. Once you have a Google Account, creating a portfolio is easy:
  1. Click the Portfolio link in the left navigation bar of the Google Finance page.
  2. Click Create a Portfolio on the right side of the page.
  3. Name your portfolio, and click OK.
Now you're ready. For example, below is a sample portfolio that we quickly created using Google Stock Screener with criteria that we though would tilt a basket to give it extra oomph.

We then clicked on the "Compare to S&P500" check box to see how it looked over the past year relative to the index (not so good it turns out). However, we can get a quick and easy visual representation of it's relative volatility and performance.