How to Create a Manual Quantitative Portfolio (Stocks)

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on whatsapp

Index

Sign up to the Aikido Newsletter

Quantitative investing used to require lots of coding experience, financial knowledge, cash, etc…

Well, not anymore! With Aikido, you can create a quant portfolio in minutes, saving you hundreds of hours of learning, research, and implementation.

In this article, we will look at how to build a ‘manual’ stock portfolio with Aikido. This means that you pick a strategy, build a tracker portfolio and follow along in whichever broker you like. The algorithm shows you which stocks to purchase!

So why build a quantitative portfolio?

  • Save hundreds of hours of research – the algorithm decides the stocks for you
  • Use time-tested strategies that have consistently beaten the market in backtests

Step 1: Find a trading strategy that you want to use

Look through Aikido’s catalog of stock trading strategies to find one that stands out to you.

You might choose a trading strategy based on your risk tolerance, appetite for returns, recent performance, or an array of other things. For argument’s sake, let’s say you chose Superior and Steady Stocks.

Step 2: Create Portfolio

Click the “CREATE PORTFOLIO” button on the strategy to enter the portfolio creation flow.

In the first step of the flow you will see two buttons: ‘Manual’ and ‘Automated’. Click Manual.

Note: Automated portfolio creation is for Premium Aikido users only. It allows you to connect your Interactive Brokers and have the whole process done for you.

Step 3: Name the Portfolio

Name your new portfolio whatever you like, or just use one of our auto-generated names.

Step 4: Add your Portfolio Addons

Currently Aikido offers the ‘Eco Focussed’ addon: an exclusion filter which removes some of the most environmentally harmful companies from your portfolio. So you can grow your money with a clear conscience.

Step 5: Choose your Amount to Invest

Choose your base currency and decide the amount you want to invest.

The amount you decide to invest is equally weighted over each holding in the portfolio.

Because the universe of stocks Aikido offers is US-only (Extended geography coming later in 2022), the investment value in USD($) is shown below the input.

Step 6: Build your Portfolio (Purchase the Stocks in your Broker)

In front of you are the stocks which the algorithm has generated; depending on the strategy there will be between 10-25 stocks in the list.

You will see the number of shares to purchase for each stock in the list.

How to purchase the stocks in your broker:

Go to your online broker and work your way through the list of stocks, purchasing each shown.

For example:

First, purchase 57 shares of Rocket Companies Inc in your broker.

You may use a market order or a limit order to buy the stock. A market order should execute instantaneously (using the market’s best price), whereas a limit order could take some time to execute (you decide the price). Most people building an Aikido portfolio will choose to use a market order.

Whatever price you paid for the stock, enter that into the “Share Price” input in Aikido and click the green tick/check button.

If the stock market is closed when you’re building the portfolio, you may not know the exact price which you paid for the stock. If that is the case, take your best guess, or leave the default price – you can always edit the transaction price afterwards.

If you cannot find the stock in your broker or don’t want to purchase a stock for whatever reason, click the red X button and the algorithm will give you a brand new stock!

Note: Aikido does not endorse or recommend any individual stock shown in this list; the stocks are purely generated by the algorithm.

Work your way through the list of stocks and when you are done click “Confirm Portfolio”

View your Portfolio

From Portfolio ‘Overview’ you can view performance, check out key metrics and view your holdings.

From the ‘Transactions’ tab you can view transaction level data (every buy or sell you have ever made). You can click a transaction row to edit it (eg. change the purchase price or the number of shares purchased). You can also click the ‘New Transaction’ to buy/sell a stock in the portfolio – you can add any publicly-traded company in the USA to the portfolio.

Rebalancing (Keeping your Portfolio up to Date)

Depending on which strategy you chose, you will need to keep the portfolio up to date every month, quarter or year. You will be notified via email when your rebalance is due (ensure you are subscribed to our mailing list to receive this!).

When a rebalance is due, you will return to Aikido, navigate to the relevant portfolio and click the ‘Rebalance’ button. You will be taken through a wizard to buy and sell stocks and shares in your portfolio.

You can read a full guide on how to rebalance a manual portfolio here.

Auto-transactions & Gotchas

There are a few events which will trigger Aikido to automatically add a transaction to your Aikido portfolio. Those events are:

Delisting

A delisting occurs when a stock is removed from an exchange, this can happen for a variety of reasons including mergers, liquidation, or even lawsuits. When this event occurs, your broker will automatically sell off the position for you – Aikido mirrors this event and adds a sell transaction to your portfolio to keep it inline with your broker. This means you could have some extra cash lying about in your broker – the next rebalance will fix this and bring your portfolio back up to the number of stocks it is supposed to have.

Note: In a situation where you own shares of company B, and B is a child company of A. If B merges with parent A, in some circumstances you will be issued stock of company A automatically by your broker. This event, while uncommon, is not mirrored by Aikido. If this event occurs you should sell the parent company A in your broker manually. Rebalance will then bring your portfolio up to date again.

Stock split

A stock split is when a company increases the number of its outstanding shares to boost the stock’s liquidity. It brings the price of a individual stock down. When this event occurs, all shares of the stock are automatically sold and then the equivalent dollar amount is repurchased. These two transactions are added to your Aikido portfolio automatically.

Other corporate actions

Other corporate actions may not be tracked by Aikido. Rebalancing will sort most issues out, but if they persist – get in touch and we would be happy to help!

2% portfolio creation buffer

When creating and rebalancing your portfolio, Aikido leave 2% of the total portfolio value to the side to account for forseen and unforseen events. For example, if you are creating a portfolio with a total value of $1000, Aikido will not invest $20. That buffer will cover the cost of:

  • Slippage
  • Market volatility
  • Currency conversion rates
  • Transaction costs
  • Other fees

Most of the 2% will not be spent and you will find the cash waiting patiently for you in your broker.

Thanks for reading; happy trading!

More To Explore

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on whatsapp
Sign up to Aikido Newsletter