Please read in conjunction with recent LinkedIn posts and slideshow tutorial <U/O> Matrix - Establishing Predictive Value: Applied Indexation, Hierarchical Data Sets and Competitive Market Information [EPV (Tutorial)] for background methodology.
w/r/t past-positive forward looking indicators featured in <U/O> Matrix via Applied Indexation, a brief primer:
> The interrelationships of business segment operations (BSOs) embedded within company revenue lines effectively serve to delineate drivers of valuation at distinct points of inflection.
> Dynamic principles of BSOs evident during benchmark analysis: 1) multinational and Large-cap companies function as sector/industry/subindustry proxies based on scale (Alpha-Beta), 2) Small- and Mid-cap companies participate as competitive peers (Alpha) and, hence, acquisition candidates and 3) among subsets of 1) and 2) are companies provisioning multiple economic sectors, asset classes and geographies.
> The extent to which an assigned benchmark and component member market capitalization deviates from a market weighted (neutral) posture is the measure whereby <U/O> Matrix via Applied Indexation captures the relationship via inverse indicators produced by the rationalization of nomenclature on a segment and classification basis.
> Proprietary research suggests a benefit of contrasting component member portfolio weight to market cap weighted portfolio positions within the context of portfolio weight versus prospective alternatives of allocated portfolio positions based on only market capitalization or equal weights as in conventional and Smart Beta strategies.
> Predominantly: 1) Small- and Mid-cap companies within the sample group possess or trend to corresponding negative indicators, that is, a portfolio position weight greater than proportionate market capitalization, 2) Mid-caps exhibit both leadership and lag, 3) Small-caps demonstrate the volatility of outperformance or underperformance in sensitivity to price and demand changes, and 4) with only a few exceptions Large-cap companies maintain positive indicators reflecting the dominance of capitalization within a classification, counter-cyclicality of conglomerates during off business cycles and/or lag effects in up markets.
> Negative/positive inversions develop a trendline over consecutive periods and often portend the directional value of securities.
> The conceptual distinction between Alpha and Alpha-Beta considerations is market capitalization.
> Successful trading strategies (conventional, systematic, factor-based) and adaptive investable motifs (niche, thematic, megatrend) isolate Value in Growth, and Growth in Value, by aligning the prospective Alpha drivers directly associated with ecosystem composition and supply chain verticals.
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