Ranking System

Multi factor ranking

Ranking systems on Portfolio123 are, at their core, quite simple: they put every stock in your universe in order. Below is the page where you decide which factors to use and theIr weights. The components of our pre-defined "Core: Value" system are shown; they are 4 groups of sub-scoring based on Earnings, Sales, Free Cash Flow, and Assets.

While ranking systems may look complicated, they are fundamentally simple:

  • The % numbers are weights. The weights are applied at each level from right to left. 

  • Composite nodes contain other nodes and combine their respective scores.

  • Factor ranks can be single factors or formulas.

  • All nodes specify whether lower values score better or higher ones.

  • Factor nodes can rank within a subset of the universe, for example within the industry.

What does it all boil down to? A single percentile rank. You can use that ranking to choose the top 10 of a given universe or top 10% or the bottom 5%. Below is the pre-defined ranking system "Core: Value" showing the overall rank, well as the ranks of the components.

If you don't want to build your own ranking systems, we have more than 40 ranking systems that have already been built for you to use immediately. They have focuses on growth or income or momentum, and they even include emulations of famous investors like Warren Buffett or Joel Greenblatt. You can either use them straight as they are or you can modify them for your own purposes.

Additional Reference

To become better at ranking, we recommend the following resources: