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WHAT IT IS
Globe Investor 5-Star Ratings provide a snapshot of how a stock's price performance compares against other stocks in its peer group. It's a report card on a stock.
The system evaluates risk-adjusted returns versus industry-group peers. Stocks are ranked from one to five stars, with the top industry out-performers receiving five stars and under-performing stocks getting one star.
HOW TO USE IT
Ratings are available on Price Reports and Company Snapshots.
A rating change is an indicator that may warrant further investigation. Globe Investor Gold subscribers can receive alerts every time there is a change in the rating, and are able to screen stocks based on their 5-Star Rating.
Please note that past performance is not necessarily indicative of future results or suitability for investment.
HOW IT WORKS
To be rated, a stock must: have two years of price history; be a common share, income trust, ETF or ADR; and have a Company Snapshot.
On a daily basis, we calculate each stock's price performance, and then subtract the rate of return on a risk-free asset, specifically 90-day Canadian T-bills. Positive returns add to a stock's return score and negative returns to a stock's regret score. We sum up five years of these daily returns and regrets, with more weighting placed on recent months.
All Canadian and U.S.-listed stocks are then grouped together into industries. Each stock's regret score is adjusted to penalize those that performed poorly, when their industry group had a high expected return. The final score for each stock is computed as its return score minus its regret score.
Stocks scoring in the top 10 per cent receive five stars, the next 22.5 per cent four stars, the middle 35 per cent three stars, the next 22.5 per cent two stars and the bottom 10 per cent one star.
5-Star Ratings are based on Algorithmics' Mark-to-Future framework for measuring risk and reward. Algorithmics, a member of the Fitch Group, is the world's leading provider of enterprise risk management solutions and services that enable financial institutions to effectively understand and manage their financial risk.
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