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Fix the Odds: Beating the market with data-driven strategies

A research study designed to help you beat the market with data-driven strategies

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Performance tracking in stock markets is often done by looking at indices, or individual shares - both of which have their downfall in a real life setting.

The performance of the index is made up of both securities which gain value and those that lose value. Unless you're tracking the entire market, the performance of your portfolio will not likely be reflective of the index performance.

But, by using a statistical method known as a Monte Carlo Simulation (MCS) we can back-test the performance of thousands of 'model' portfolios. This allows us to assess how portfolios built using real criteria might have performed over a set time period.

In this study we have used this Monte Carlo Simulation to build 60,000 portfolios using six different screening strategies. This has helped us gauge the efficacy of these strategies in filtering out less favourable investments. We have found that some strategies raise the odds of building winning portfolios compared to others.

But this is not the end of the story. Using the numbers alone can increase your chances of picking winners and avoiding losers, but identifying those winners is really down to you. We hope that this study can help skew the odds in your favour.

If you want to check out the full data, follow the link in this Google sheet.

Further Reading

Building your portfolio

It is important to make sure your strategy is aligned with your personal circumstances. The articles below can help you improve your portfolio building skills

Using screens

In our study we used screens to help whittle down the investment universe and pick stocks that were aligned with each strategy. Stockopedia’s ready-made screens or screening tools can help you employ the same technique.

Factor Investing

At Stockopedia we have built a series of proprietary algorithms to help you benefit from the power of factors. We call these our StockRanks. Find out more about factor investing and the StockRanks in the links below.

Stock analysis

Our study has shown that strategies and screens are only part of the journey to investment success. We have a suite of tools to help you effectively analyse stocks and a strong community that can help you benefit from the knowledge of others.

Created by

Chief Operating Officer
Gavan Grenville-Hunt
Chief Operating Officer
Head of Content
Megan Boxall
Head of Content
Financial Analyst
Keelan Cooper
Financial Analyst