📚 Free Essay on the Stock Market Performance

Type of paper:	Essay
Categories:	Economics Finance
Pages:	4
Wordcount:	851 words

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Economic questions and answers

Question 1

There are 10 stocks in the portfolio. The stocks are from seven sectors; Financial services, Consumer durables, Energy, Health care, consumer Non-durables, Technology, and Capital goods.

Symbol	Market Cap	Industry	Weight
AEL	$1,476,946,968.00	Financial services	13.04%
AIT	$1,960,078,333.50	Consumer Durables	17.30%
ARCH	$1,447,930,120.00	Energy	12.78%
AFI	$443,572,258.08	Consumer Non-Durables	3.92%
AWI	$2,047,404,050.30	Consumer Non-Durables	18.08%
AAC	$180,129,788.80	Health Care	1.59%
AAV	$1,218,446,823.00	Energy	10.76%
ANW	$418,240,787.25	Energy	3.69%
ALJ	$511,923,962.55	Energy	4.52%
AYR	$1,622,222,143.16	Technology	14.32%
	$11,326,895,234.64		100.00%

Stock market performance

Question Two

The stock market performance is different between industries at different economic cycles. For instance:

· A few industries are interest sensitive and do best right on time in a economy recuperation when financing costs have bottomed, so their stocks foresee and begin outflanking late in a subsidence (e.g., budgetary and utilities).

· Others advantage from expansion and do best when the economy is topping, so their stocks beat beginning amidst the economy recuperation (e.g., vitality, essential materials, and valuable metals).

· Technology and first-class customer optional enterprises like automobiles and lodging do best amidst a financial recuperation when costs are still direct yet individuals are utilized, so these stocks outflank toward the begin of the economy recuperation.

· During recession, shopping and health care industry do moderately well in light of the fact that everything else that is all the more financially delicate does much more awful, so these stocks beat close to the economy pinnacle.

Question Three

The historical period used in the computations is between January, 1 2016 and November, 7 2016.

AEL

Date	Adj Close	Return	Date	Adj Close	Return	Beta
11/1/2016	15.93	-0.11154	11/1/2016	2085.18	-0.01927	4.045032
10/3/2016	17.93	0.01128	10/3/2016	2126.15	-0.01943
9/1/2016	17.73	0.006243	9/1/2016	2168.27	-0.00123
8/1/2016	17.62	0.106089	8/1/2016	2170.95	-0.00122
7/1/2016	15.93	0.117895	7/1/2016	2173.6	0.03561
6/1/2016	14.25	-0.12091	6/1/2016	2098.86	0.000911
5/2/2016	16.21	0.157857	5/2/2016	2096.95	0.015325
4/1/2016	14	-0.16667	4/1/2016	2065.3	0.002699
3/1/2016	16.8	0.235294	3/1/2016	2059.74	0.065991
2/1/2016	13.6	-0.25234	2/1/2016	1932.23	-0.00413
1/4/2016	18.19		1/4/2016	1940.24

AIT

Date	Adj Close		Date	Adj Close		Beta
11/1/2016	49.2	-0.0315	11/1/2016	2085.18	-0.01927	1.093207
10/3/2016	50.8	0.086863	10/3/2016	2126.15	-0.01943
9/1/2016	46.74	-0.01641	9/1/2016	2168.27	-0.00123
8/1/2016	47.52	0.018034	8/1/2016	2170.95	-0.00122
7/1/2016	46.67822	0.040098	7/1/2016	2173.6	0.03561
6/1/2016	44.8787	-0.00133	6/1/2016	2098.86	0.000911
5/2/2016	44.93835	-0.00751	5/2/2016	2096.95	0.015325
4/1/2016	45.27846	0.055991	4/1/2016	2065.3	0.002699
3/1/2016	42.8777	0.127273	3/1/2016	2059.74	0.065991
2/1/2016	38.03667	0.008774	2/1/2016	1932.23	-0.00413
1/4/2016	37.70585		1/4/2016	1940.24

ARCH

	Date	Adj Close	Return	Date	Adj Close	Return	Beta
ARCH	11/1/2016	68	-0.07332	11/1/2016	2085.18	-0.01927	0.526038
	10/3/2016	73.38	0.046492	10/3/2016	2126.15	-0.01943
	9/1/2016	70.12	-0.00142	9/1/2016	2168.27	-0.00123
	8/1/2016	70.22	0.017681	8/1/2016	2170.95	-0.00122
	7/1/2016	69	0.014706	7/1/2016	2173.6	0.03561
	6/1/2016	68	0.005917	6/1/2016	2098.86	0.000911
	5/3/2016	67.6	0.117355	5/2/2016	2096.95	0.015325
	4/1/2016	60.5	0.018519	4/1/2016	2065.3	0.002699
	3/1/2016	59.4	0.03125	3/1/2016	2059.74	0.065991
	2/1/2016	57.6	0.034669	2/1/2016	1932.23	-0.00413
	1/4/2016	55.67		1/4/2016	1940.24

AFI

Date	Adj Close	Return	Date	Adj Close	Return
11/1/2016	15.64	-0.03397	11/1/2016	2085.18	-0.01927	5.276814
10/3/2016	16.19	-0.14248	10/3/2016	2126.15	-0.01943
9/1/2016	18.88	-0.08438	9/1/2016	2168.27	-0.00123
8/1/2016	20.62	0.034621	8/1/2016	2170.95	-0.00122
7/1/2016	19.93	0.175811	7/1/2016	2173.6	0.03561
6/1/2016	16.95	0.0217	6/1/2016	2098.86	0.000911
5/2/2016	16.59	0.139423	5/2/2016	2096.95	0.015325
4/1/2016	14.56	0.10303	4/1/2016	2065.3	0.002699
3/17/2016	13.2		3/1/2016	2059.74

AWI

Date	Adj Close		Date	Adj Close
11/1/2016	36.75	-0.02	11/1/2016	2085.18	-0.01927	2.90003
10/3/2016	37.5	-0.09245	10/3/2016	2126.15	-0.01943
9/1/2016	41.32	-0.04946	9/1/2016	2168.27	-0.00123
8/1/2016	43.47	0.023546	8/1/2016	2170.95	-0.00122
7/1/2016	42.47	0.084802	7/1/2016	2173.6	0.03561
6/1/2016	39.15	-0.0532	6/1/2016	2098.86	0.000911
5/2/2016	41.35	0.013232	5/2/2016	2096.95	0.015325
4/1/2016	40.81	-0.1563	4/1/2016	2065.3	0.002699
3/1/2016	48.37	0.193437	3/1/2016	2059.74	0.065991
2/1/2016	40.53	0.047828	2/1/2016	1932.23	-0.00413
1/4/2016	38.68		1/4/2016	1940.24

AAC

Date	Adj Close	Return	Date	Adj Close	Return
11/1/2016	7.51	-0.54179	11/1/2016	2085.18	-0.01927	2.372906
10/3/2016	16.39	-0.0575	10/3/2016	2126.15	-0.01943
9/1/2016	17.39	-0.11094	9/1/2016	2168.27	-0.00123
8/1/2016	19.56	-0.13719	8/1/2016	2170.95	-0.00122
7/1/2016	22.67	-0.00657	7/1/2016	2173.6	0.03561
6/1/2016	22.82	0.060902	6/1/2016	2098.86	0.000911
5/2/2016	21.51	0.044682	5/2/2016	2096.95	0.015325
4/1/2016	20.59	0.040424	4/1/2016	2065.3	0.002699
3/1/2016	19.79	-0.0299	3/1/2016	2059.74	0.065991
2/1/2016	20.4	0.142217	2/1/2016	1932.23	-0.00413
1/4/2016	17.86		1/4/2016	1940.24

AAV

Date	Adj Close	Return	Date	Adj Close	Return	Beta
11/1/2016	6.4	-0.05185	11/1/2016	2085.18	-0.01927	1.879592
10/3/2016	6.75	-0.03983	10/3/2016	2126.15	-0.01943
9/1/2016	7.03	0.029283	9/1/2016	2168.27	-0.00123
8/1/2016	6.83	0.075591	8/1/2016	2170.95	-0.00122
7/1/2016	6.35	0.135957	7/1/2016	2173.6	0.03561
6/1/2016	5.59	-0.05093	6/1/2016	2098.86	0.000911
5/2/2016	5.89	0.02972	5/2/2016	2096.95	0.015325
4/1/2016	5.72	0.041894	4/1/2016	2065.3	0.002699
3/1/2016	5.49	0.08284	3/1/2016	2059.74	0.065991
2/1/2016	5.07	-0.07143	2/1/2016	1932.23	-0.00413
1/4/2016	5.46		1/4/2016	1940.24

ANW

Date	Adj Close	Return	Date	Adj Close	Return	Beta
11/1/2016	8.25	-0.0407	11/1/2016	2085.18	-0.01927	1.355462
10/3/2016	8.6	-0.14	10/3/2016	2126.15	-0.01943
9/1/2016	10	0.001001	9/1/2016	2168.27	-0.00123
8/1/2016	9.99	0.535075	8/1/2016	2170.95	-0.00122
7/1/2016	6.507824	0.185455	7/1/2016	2173.6	0.03561
6/1/2016	5.489729	-0.17152	6/1/2016	2098.86	0.000911
5/2/2016	6.626291	-0.17164	5/2/2016	2096.95	0.015325
4/1/2016	7.999306	0.062087	4/1/2016	2065.3	0.002699
3/1/2016	7.531685	0.058611	3/1/2016	2059.74	0.065991
2/1/2016	7.114686	0.007022	2/1/2016	1932.23	-0.00413
1/4/2016	7.065072		1/4/2016	1940.24

ALJ

Date	Adj Close	Return	Date	Adj Close	Return	Beta
11/1/2016	7.17	-0.11042	11/1/2016	2085.18	-0.01927	1.308924
10/3/2016	8.06	0	10/3/2016	2126.15	-0.01943
9/1/2016	8.06	-0.01467	9/1/2016	2168.27	-0.00123
8/1/2016	8.18	0.180646	8/1/2016	2170.95	-0.00122
7/1/2016	6.928411	0.091049	7/1/2016	2173.6	0.03561
6/1/2016	6.350227	-0.14172	6/1/2016	2098.86	0.000911
5/2/2016	7.398799	-0.26764	5/2/2016	2096.95	0.015325
4/1/2016	10.10263	0.017442	4/1/2016	2065.3	0.002699
3/1/2016	9.929445	0.046653	3/1/2016	2059.74	0.065991
2/1/2016	9.486854	-0.20461	2/1/2016	1932.23	-0.00413
1/4/2016	11.9273		1/4/2016	1940.24

AYR

Date	Adj Close	Return	Date	Adj Close	Return	Beta
11/1/2016	20.37	-0.00876	11/1/2016	2085.18	-0.01927	1.431672
10/3/2016	20.55	0.034743	10/3/2016	2126.15	-0.01943
9/1/2016	19.86	-0.08268	9/1/2016	2168.27	-0.00123
8/1/2016	21.65	-0.0148	8/1/2016	2170.95	-0.00122
7/1/2016	21.97515	0.135992	7/1/2016	2173.6	0.03561
6/1/2016	19.34446	-0.07474	6/1/2016	2098.86	0.000911
5/2/2016	20.90705	-0.01489	5/2/2016	2096.95	0.015325
4/1/2016	21.22298	-0.02428	4/1/2016	2065.3	0.002699
3/1/2016	21.75111	0.108674	3/1/2016	2059.74	0.065991
2/1/2016	19.61903	0.182997	2/1/2016	1932.23	-0.00413
1/4/2016	16.58417		1/4/2016	1940.24

Portfolio Beta

To compute the portfolio beta, the weights of each of the stock in the portfolio is multiplied with the stock beta. The formula is shown below; Where is the weight of stock i in the portfolio.

Symbol	Market Cap	Industry	Weight
AEL	$1,476,946,968.00	Financial services	13.04%
AIT	$1,960,078,333.50	Consumer Durables	17.30%
ARCH	$1,447,930,120.00	Energy	12.78%
AFI	$443,572,258.08	Consumer Non-Durables	3.92%
AWI	$2,047,404,050.30	Consumer Non-Durables	18.08%
AAC	$180,129,788.80	Health Care	1.59%
AAV	$1,218,446,823.00	Energy	10.76%
ANW	$418,240,787.25	Energy	3.69%
ALJ	$511,923,962.55	Energy	4.52%
AYR	$1,622,222,143.16	Technology	14.32%
	$11,326,895,234.64		100.00%

Computations
Portfolio Beta	2.069169834

Observations on Beta

Beta is considered a measure of the volatility, or systematic risk, of an investment program or security in comparison to a benchmark index. The beta is a measure of the systematic or volatility because of exposure to market movements as opposed to individual security factors. A portfolio systematic risk and volatility measure is considered as beta if it is compared with the benchmark index. A portfolio beta can be high or low when compared with the index. Basically, higher beta compared with index means the portfolio price performance is better. In addition, when a portfolio performance is lower it means that its price performance as compared with the index is lower. Notably, portfolio relative weakness and strength is detected by the beta it has.

Investment beta is computed comparing it with the index, for instance S&P index. When an investment’s beta is 1.5, it basically means that the portfolio is 50% more volatile than the index it is compared with. If investment’s beta is compared with the index, then either the investment will lose or gain by 50%.

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