What is Heatmap in Portfolio Analysis?

Portfolio Heatmap is one of the 19 analysis tools offered by Alpha Builder. It helps in comparing symbols within a portfolio based on their performance across different timeframes.

The heatmap is based on the concept of alpha, which represents the gain of a stock in relation to the benchmark S&P-500 index. For example, if AMZN has a value of -0.45%, it means that it lagged or underperformed S&P by 0.45%. Conversely, if TSLA has a value of +2.35%, it signifies that it outperformed S&P by 2.35%.

The size or area of the symbol box in the heatmap represents the total traded value, which is the product of volume and price. A larger box indicates a higher total traded value for that particular stock.

The colour of the box in the heatmap indicates the level of outperformance or underperformance compared to the S&P. A lighter green colour signifies a stronger outperformance, while a lighter brown colour indicates underperformance.

In addition to the alpha heatmap, there are other elements in the Portfolio Heatmap tool. The Percentage Return heatmap shows the returns of stocks based on their market performance. The Trend heatmap, shown below, provides insights on whether the stock is bullish or bearish at the present moment.

All these analyses can be conducted on different timeframes, including daily, monthly, quarterly, half-yearly, yearly, or two-yearly. Furthermore, these analyses can be applied to both saved portfolios and standard portfolios based on themes or sectors.

Follow these easy steps to use Alpha Builder’s tool “Portfolio heatmap” to see the chart of compound annual growth rates over all timeframes:

1. On the home-page, click “Alpha Builder” or select sub-menu item “ALPHA BUILDER” under the “TOOLS” head of the “PRODUCTS” menu.
2. Scroll down the page and click on “Portfolio heatmap“.
3. The heatmap for the default free portfolio is shown.
4. Click on the orange button “Get Heat Map” to get a pop-up titled “Portfolios + Investment Themes” with different options to select “Period(default 1 day), “Plot(default Alpha), “Data(default Total Traded Quantity), and “Portfolio(default free portfolio). The changes on the heatmap will reflect immediately on changing these parameters.
5. Click “x” on this pop-up to close this pop-up.

Useful Links:
Portfolio Heatmap US
How to Use Alpha Builder (YouTube)