Equivalent sectors
How many equally sized sectors your money is spread across.
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Where it misleads
It looks only at the money. Five sectors that fall together in a broad sell-off count as five here and as barely more than one in independent sector bets — which is the figure that says whether spreading across sectors actually spreads your risk.
How it is computed here
The inverse of the Herfindahl index over the sector weights: three sectors at a third each give 3.0; one at 90% and two at 5% give 1.2.
Worked example
- Each holding sits in a sector of its own: ARB → Industrials, AUV → Commodities, HLX → Technology, KYP → Financials, ORB-USD → Digital assets, VRD → Utilities, UST 2.250% 2031-02-15 → Bonds.
- With one holding per sector, the sectors' weights are the holdings' weights, so this measure says what Equivalent positions already says; it says something of its own once two holdings share a sector.
Demo portfolio: seven invented holdings, generated prices, measured by the real engine. Past returns do not predict future ones.
Where it misleads
It looks only at the money. Five sectors that fall together in a broad sell-off count as five here and as barely more than one in independent sector bets — which is the figure that says whether spreading across sectors actually spreads your risk.