Method and apparatus for creating and managing a visual representation of a portfolio and determining an efficient allocation
First Claim
1. A graphical simulator comprising a computerized processor wherein said computerized processor is configured to:
- a. accept an asset universe wherein said asset universe comprises at least two assets;
b. construct a relationship matrix for said asset universe wherein said relationship matrix depicts a quantification of a relationship between each of said at least two assets from said asset universe relative to each of said other assets from said asset universe;
c. determine a vector or coordinate for each of said at least two assets based on said relationship matrix;
d. rescale each said vector or coordinate to match said vector or coordinate to a set of selected variables;
e. plot each of said resealed vectors or coordinates to create a model of said asset universe; and
f. construct a hull for said model.
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Abstract
The invention provides a method and device for creating a holistic representation of a portfolio. The model graphs diversification and explains diversification as symmetry. The model can facilitate active management of a portfolio, communication of complicated investment concepts and lucid, holistic portfolio representation. The model, normally depicted in three dimensions may provide a platform to perform portfolio analysis and manage investments. The invention embodies custom efficient portfolio creation, and diversification quantification via the intra-portfolio correlation. Portfolio creation gives the user freedom to select user-defined variables that are modeled as axes. Assets are graphed on the basis of their relationship or correlation with all the other assets in the determined asset universe. More attractive assets are graphed furthest from the origin. Thus the efficient allocation is determined using volume attribution for the assets comprising the surface of the model. Users seek to create large, symmetrical volumes that exhibit maximum diversification.
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Citations
20 Claims
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1. A graphical simulator comprising a computerized processor wherein said computerized processor is configured to:
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a. accept an asset universe wherein said asset universe comprises at least two assets;
b. construct a relationship matrix for said asset universe wherein said relationship matrix depicts a quantification of a relationship between each of said at least two assets from said asset universe relative to each of said other assets from said asset universe;
c. determine a vector or coordinate for each of said at least two assets based on said relationship matrix;
d. rescale each said vector or coordinate to match said vector or coordinate to a set of selected variables;
e. plot each of said resealed vectors or coordinates to create a model of said asset universe; and
f. construct a hull for said model.
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2. A graphical simulator comprising a computerized processor wherein said computerized processor is configured to:
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a. accept an asset universe wherein said asset universe comprises at least two assets;
b. construct a relationship matrix for said asset universe wherein said relationship matrix depicts a correlation computed from a correlation formula wherein said correlation formula measures the performance of each of said at least two assets from said asset universe relative to each of said other assets from said asset universe; and
c. compute a vector component for each of said at least two assets in said asset universe for depiction in a base model wherein said vector component represents a relationship derived from said relationship matrix for each of said at least two assets in relation to each other;
- View Dependent Claims (3, 4, 5, 6, 7, 8, 9, 10)
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11. A graphical simulator comprising a computerized processor and a display device in communication with said computerized processor wherein said computerized processor is configured to:
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a. accept an asset universe wherein said asset universe comprises at least two assets;
b. construct a relationship matrix for said asset universe wherein said relationship matrix depicts a correlation computed from a correlation formula wherein said correlation formula measures the performance of each of said at least two assets from said asset universe relative to each of said other assets from said asset universe;
c. compute a set of vector components between each of said at least two assets in said asset universe wherein said vector components are derived from said relationship matrix for each of said at least two assets in relation to each other;
d. adjust said vector components to conform to a set of predefined constraints;
e. communicate said vector components associated with each of said at least two assets to said display device to display a model of said asset universe. - View Dependent Claims (12, 13, 14, 15, 16, 17)
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18. A graphical simulator comprising a computerized processor and a display device in communication with said computerized processor wherein said computerized processor is configured to:
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a. accept a resource universe wherein said resource universe comprises at least two resources;
b. construct a relationship matrix for said resource universe wherein said relationship matrix depicts a correlation computed from a correlation formula wherein said correlation formula measures the correlation between each of said at least two assets from said resource universe relative to each of said other resources from said resource universe;
c. compute a set of vector components between each of said at least two resources in said resource universe wherein said vector components are derived from said relationship matrix for each of said at least two resources in relation to each other;
d. adjust said vector components to conform to a set of predefined constraints;
e. communicate said vector components associated with each of said at least two resources to said display device to display a model of said resource universe.
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19. A method of selecting a set of assets comprising an efficient set comprising the steps of
a. selecting an asset universe wherein said asset universe comprises at least two assets; -
b. constructing a relationship matrix for said asset universe wherein said relationship matrix depicts a relationship quantification between each of said at least two assets from said asset universe relative to each of said other assets from said asset universe;
c. solving a system of equations to determine a vector or coordinate for each of said at least two assets based on said relationship matrix;
d. scaling said vector or coordinate for each of said at least two assets against a set of selected variables;
e. plotting said vector or coordinate to create a model representing said asset universe;
f. determining an exterior for the model;
g. determining an efficient set by selecting a set of assets wherein each asset in said set of assets comprises a set of coordinates which are located on the substantial exterior of the model.
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20. A method of determining an efficient allocation for a set of assets comprising the steps of:
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a. selecting an asset universe wherein said asset universe comprises at least two assets;
b. constructing a relationship matrix for said asset universe wherein said relationship matrix depicts a relationship quantification between each of said at least two assets from said asset universe relative to each of said other assets from said asset universe;
c. determine a vector or coordinate for each of said at least two assets based on said relationship matrix;
d. scaling each said vector or coordinate for each of said at least two assets according to a set of predefined criteria;
e. creating a model from said vector or coordinate for each of said at least two assets;
f. determining an exterior surface for said model;
g. determining a set of assets associated with a set of coordinates which are substantially located on said exterior surface of said model;
h. re-allocating a set of resources associated with each of said at least two assets to produce said efficient allocation.
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Specification