1. See how Risk and Return measure your Selected Stock

1. See how Risk and Return measure your Selected Stock, revealing significant changes in price

Sand Storm! 2010: Act III, Scene 1; Return and Risk for The Selected Stock.

The Return and Risk for every stock in the dataset, and their elementary functions qReturn and pRisk, are the essential results of the weekly analyses. The Measurements Snapshot is a frame from the animation illustrating how the DiligentInvestor econometric model collects these critical values. Using your Selected Stock as the example, the fitted Return and Risk evolve with time as each new trading day's closing price enters the model. Since the Risk forms an envelope one standard deviation from the Return, any closing price lying outside the envelope appears to mark a significant event, suggesting that further examination may be worthwhile. Any closing price within the envelope, on the other hand, suggests that your Selected Stock is behaving normally at that date.

The DiligentInvestor econometric model determines Risk from the rate of change of the daily closing price, dB$ per day. As discussed in Act II, this Risk Rate clearly does not have a normal distribution, as shown by the rose diagram in the snapshot mentioned above. This suggests that investment strategies that depend upon "reversion to the mean" may be misleading, since the mean itself may be meaningless for rates of change.