Equivalent positions
How many equal-sized holdings your money is spread across.
In the demo portfolio
3.28 of 4
How it is computed here
The inverse of the Herfindahl index, the sum of the squared weights.
Worked example
- Square each weight and add them: 0.305 (the Herfindahl index).
- 1 ÷ 0.305 = 3.28: the money is spread like 3.3 equal positions.
Demo portfolio: four invented companies, generated prices, measured by the real engine. Past returns do not predict future ones.
Where it misleads
It looks only at the weights. Ten equal positions in ten banks score a perfect ten here and about one on independent bets — two different problems with two different fixes.