Risk Grades Review: They’re Grrrrrre… Good

While watching a TV program earlier this week I happened to catch mention of a free portfolio assessment tool called Risk Grades. Being that I like free stuff I was intrigued enough to go take a look and write up this review.

With a background in software development I can sniff out an abandoned site pretty quick and risk grades certainly feels massively undermanned or out right abandoned. Upon signing up the system tells me I should expect a validation email, and yet I am able to login directly to the site. there are also a few spelling mistakes and as I browse the site, and  a few graphs really need some polish- but hey let’s remember this site is free so if it is actively being worked on shouldn’t matter too much as long as it works.

There are a number of tools available on the risk grades site, the first we see is a portfolio assessment tool. We key in a series of different stocks and the related market where they trade on. (Again we notice some aged components, the drop down for selectable markets show Canada VCE which I imagine is a reference to the old Vancouver Stock Exchange long since bought up by the TSE.) Having keyed in a number of stocks we get a view of our overall portfolio risk grade- this is actually pretty interesting.

Each stock is given a ranking between 0-1000 representing it’s risk. The formula appears to be driven off of a beta index of stocks where they compare volatility of price against a fixed market average with some splashes of other data. The assessments of risk are pretty much in line with where I expected each stock so I have to say this calculation was pretty useful. Lord knows I have made my love of boring lower risk stocks public in the past.

The next set of screens allow us to drill in and view individual assessments of stocks. This shows us the generalized risk, and price to risk returns of various holdings. Again pretty useful.

There were quite a few other pages that you might also find interesting that show sector risk analysis and market risk- neat stuff.

So how would I use this tool? I think as part of a portfolio rebalance this might come in handy. My results were somewhat tepid on the risk chart but I can see how this might be eye opening if your risk assessment were shooting off the scale.  Overall I would give this product a recommend rating, it works, provides some useful data, and it is free. There are certainly some charts and pages on the site in need of modification to clarify content, and it does appear to need the loving touch of a word smith- but hey I like it.