Glossary of Covestor Terms

We use a number of terms on the Covestor site which people occasionally use elsewhere in different ways. This is a summary of their meaning on Covestor

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

Allocation

• The proportion of a Portfolio made up by an individual trade. The allocation figure is calculated at the time of that trade only.

Alpha

• A measure of a member's ability to generate returns irrespective of market direction. A positive alpha suggests the member is able to generate returns greater than those which can be attributed to the underlying market, as defined by the chosen benchmark.

Annualized Return

• The cumulative annual return of a member's portfolio, showing the effective return should the member keep performing at the same rate as they have been for the remainder of a 12 month period, since inception. On Covestor the annualized return will not appear until the member has more than 1 month's history.

Beta

• The sensitivity of the member's portfolio returns to the underlying market, as defined by the chosen benchmark. Beta may be seen as a predictor of the portfolio's returns relative to the benchmark. For instance, a portfolio with a beta of 1 implies it will move up or down in line with the benchmark. A portfolio with a beta of less than 1 implies that the portfolio both rises and falls less than the benchmark. A portfolio with a beta of more than 1 implies that it rises and falls more than the benchmark.

Blog Widget

• An element or badge that a Member can put on their existing blog to add credibility to their analysis. These are personalized to each Covestor account allowing the member to share a verified account of how and what they are doing, beyond the Covestor website.

Broker Link

• A secure 'view only' connection to a member's Broker account, allowing their trade and holding data to be automatically published to their Covestor Fact Sheet.

Capital Changes

• Changes to the total size of a portfolio from the introduction or removal of cash/stock.

CCY

• Currency.

Commentary

• A view of what all of the members who are holding a stock at a point in time, are saying about it.

Current Valuation

• An indication of your return, had you invested your 'Tracking Amount' into the stocks of the person you are tracking, at the same execution price. Because the member you are tracking will add and remove cash/stock from their portfolio, changes in the Current Valuation represent both changes due to performance, as well as the changing size of their portfolio. The amount of cash going into or out of their account will explain any significant disparity you may see between the Tracking Amount and the Current Valuation.

Exposure

• The proportion of a Portfolio made up by an individual holding, irrespective of whether the holding is long or short. The exposure is calculated by taking the current value of each individual holding and calculating what proportion this is of the total portfolio value.

Fact Sheet

• The Fact Sheet is a summary of the member's investment record and is their face to the Covestor community. It comprises similar information to that published by professional fund managers and contains qualitative information about the member (including their investment style and market outlook) along with an analysis of their portfolio, performance and risk measures.

Follower Months

• The cumulative months for which a member has been tracked by others, since joining Covestor. For example, If 25 members track one member for 3 full months that member will accumulate 75 'follower months'. The number of follower months accumulated appears next to the members name e.g. [21], and is an indication of a members popularity with the Covestor community.

Followers

• The individuals who are currently Tracking a member's trades.

Holding Rationale

• The case made by a member for their position in a Holding. Other members can rate the strength of the case made as to how 'Insightful' they find the member's analysis.

Holdings

• The individual equity positions (long and short), which together make up a member's portfolio.

Insight

• The aggregate rating from the Covestor community, of the strength of the argument made by a member for each holding. See Holding Rationale

Maximum Drawdown

• The largest amount that the portfolio has ever fallen, expressed as a percentage. It is a numeric expression of the regret an investor might feel for not having sold at the highest price.
  
  Note, the maximum drawdown is not the largest loss in a single period, but the largest cumulative loss from peak to trough. This proportion of the portfolio or benchmark might include some positive returns but with an overall negative trend.
  
  The lower the better.

Member

• A participant of the Covestor community, who has either been invited to join, given their investment record, or who has qualified via a detailed online questionnaire.

Notification

• Members can choose to receive live email notification of the real trades of other members they are tracking. Trade notifications are rebalanced relative to the Tracking Amount.

Portfolio

• All of a members equity holdings in their linked broker account.

Registration Code

• A code issued exclusively by Covestor, either by direct invitation or by completion of the qualifying member questionnaire, which allows for access to all Covestor features. Codes can be used only once.

Replicate

• When a member starts to track another member they enter a 'Tracking Amount' with which to follow their portfolio. Using the 'Replicate' feature they can see, relative to the tracking amount, what holdings they would need at any point in time to replicate the positions and performance of the member they are tracking.

Sharpe Ratio

• A measure of risk-adjusted return, using the return and standard deviation. A higher Sharpe Ratio indicates the portfolio has earned a higher return for each unit of risk incurred. The higher the better.

Standard Deviation

• Standard Deviation is the measure of dispersion about a mean. It is used as a measure of risk of the portfolio returns. It represents the consistency with which returns were delivered in the past. The lower the better.

Track List

• A summary of who each member is tracking. That is, the list of all of the other members being tracked by a member.

Tracking

• The process of following the real trades of another member.

Tracking Amount

• Covestor never reveals the true size or valuation of a member's portfolio but instead normalizes the actual data to a 'Tracking Amount'. When a member starts tracking another member they are asked to enter a nominal Tracking Amount with which they would like to follow him/her.

  The email Notification they then receive, and their holding recommendations in the Replicate tab, reflect the actual trades/positions of the lead member but are normalized to a portfolio of the size specified by the Follower in the 'Tracking Amount'.

Tracking Return

• The cumulative return achieved by the member from the date at which tracking commenced (as opposed to the annualized return which is calculated from portfolio inception).