Yield and Income in Portfolio Analysis

• Yield Analysis:- Yield represents the income generated by an investment relative to its current
market value.
• Application in Portfolio Analysis:-
• Dividend Yield:- For stocks, the dividend yield is calculated by dividing the annual dividend per share by the current
market price per share. It helps investors understand the income potential from holding dividend-paying stocks.
• Bond Yield:- In the case of bonds, yield can be measured through current yield and yield to maturity. This is crucial
for fixed-income investments.

• Income Analysis:- Income analysis involves evaluating the sources and sustainability of income
generated by the portfolio. This analysis is vital for income-focused investors.
• Considerations:-
• Diversification of Income Sources: A well-balanced portfolio may include various income-generating assets to reduce
risk.
• Quality of Income: Examining the reliability and stability of income streams helps assess the sustainability of returns.
 Drawdown Analysis in Portfolio Analysis
• Drawdown analysis measures the peak-to-trough decline in the value of a portfolio during a
specific period.
• It helps investors assess the risk and potential losses associated with their investment strategy.
• Drawdown = (Peak Value – Trough Value)/ Peak Value * 100.
• Peaks and troughs in a portfolio can be identified by tracking the value of the portfolio over time.
• Drawdown analysis helps investors understand the maximum losses they might experience in a
given period.
• Investors can compare drawdown metrics across different portfolios.
• Drawdown analysis is not a one-time exercise. Continuous monitoring is of drawdowns helps
investors stay informed about the risk profile of their portfolios.