Ranking

Stocks in the momentum portfolio are ranked based on performance measurement criteria. In Momentify, there are four ranking methods available:

Return Percent
This is one of the most widely used ranking methods. It ranks stocks based on their returns over a specified period, making it a straightforward and effective way to measure performance.

Sharpe Return
The Sharpe Return is a statistical method that adjusts returns for standard deviation, giving preference to stocks with lower volatility. While this approach significantly controls drawdowns, it may also lead to slightly lower returns.

Volar
Volar, developed by Definedge, stands for Volatility Adjusted Returns. This method considers both the volatility and the returns of a stock, prioritizing stocks that generate higher returns relative to their volatility. Volar helps control drawdowns without compromising returns and, in some cases, even improves them.

RSI
RSI (Relative Strength Index) is a well-known technical momentum indicator. It ranks stocks based on their RSI values, which reflect the strength of bullish movements relative to bearish movements. This method also helps assess the quality of a trend. Stocks with a higher RSI for the selected period receive a higher ranking.

Which method should you follow?
You can backtest and simulate these ranking methods in RZone → Momentum Investing Scanner to determine which approach aligns best with your strategy.

Each method has its own characteristics and may perform better in different market conditions.

We recommend starting with the Volar method for initial testing.