Financial security investment decisions can be optimized through the analysis of financial market data in Excel. Excel can access market data and perform analytical tasks such technical analysis and portfolio management to improve investment profitability. Financial markets can be analysed in three different areas: technical analysis, forecasting and predictions, and portfolio management. Excel tools and spreadsheets with predefined formats and standardized data structures can be used to justify the forecasting of data over time to serve the investments and business proposals. These Excel models make use of advanced statistical methodologies, time series, regression analysis and significance testing. Let’s take a look on how to easily perform all the financial market analysis tools.
Forecasting and prediction
When it comes to forecasting and predictions, there are many different models available. Listed below are a few of the best tools and models that can facilitate financial forecasting and prediction process:
- Multiple Regression
- Neural Network Prediction
- Time Series Forecasting
- Excel Forecasting Plugin
- Statistics Add-in
- Time Series Analysis
Among the above mentioned models, multiple regression analysis and time series are considered as most useful for sorting out the future trends. Regression analysis is usually carried out with simple statistical formulas, but it still provides a solid basis for identifying the value drivers. The regression analysis results can be presented in the text format that are easier to understand for the users. One thing to be noted is that multiple regression analysis is not active in Excel by default, but you have to turn it on from the options of the Excel. For activating the data analysis, go to Options and then go to Add-ins menu. The Data Analysis button can be displayed by enabling the Tool Pak Kit from the Add-ins options.
For more advanced and highly precise results, experts prefer tailor made statistical tools to perform forecasting and analysis of data. The native formulas in Excel do not offer high precision and can be difficult to use as well. Paid statistical plugins can be installed in MS Excel to take the analysis to the next level. These premium add-ins are developed by professionals who have industry experience and practical knowledge about the forecasting processes. Some advanced operations include the T-tests, Fisher tests, and nonparametric statistics, Cochran Q-tests, cross tabulation statistics and so on.
Portfolio Management
Managing investment portfolios in Excel is another great facility that can be accomplished for free. Investors can analyse the security returns against market returns, their volatility, and relevant risks in the investments. Again the there are some Excel tricks that comes handy when attempting to optimize investment portfolios. It is good idea to buy or find any readymade Excel spreadsheet with all the functions already embedded in them. With the help of Excel templates, investors can easily optimize, track, and monitor the performance of the investment portfolio. With Excel templates, it is easy to monitor the investments in stocks and financial securities. Price quotes can be imported intoExcel spreadsheets from automatic online sources for further processing. Some of the advantages of managing portfolios in Excel include the quick turnaround, easy input of data, familiar interface and easy to understand the navigation and results. Investors can easily specify the number of securities, set minimum and maximum limits of investments, set threshold for target returns, calculate SHARPE ratios, and evaluate results in the form of data visualizations. Furthermore, there can be functionalityto support the roll back of periodic test functions in the Excel solution. With the help of charts, the investors can select the desired risk and return pre-sets in order align the portfolio with their investment strategy and objectives.
A range of purpose built Excel solutions to assist in the analysis of financial markets can be found at http://www.business-spreadsheets.com/solutions.asp?cat=2
