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DataCamp

Financial Analytics in Google Sheets

via DataCamp

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Overview

Learn how to build a graphical dashboard with Google Sheets to track the performance of financial securities.

Monitoring the evolution of traded assets is a crucial skill in the finance sector. This comprehensive course is designed to equip you with the knowledge and skills to build a graphical dashboard using Google Sheets. You will learn to track and analyze the performance of financial securities, focusing on historical prices and dividends of the hypothetical stock ABC. The course will guide you through the process of visualizing the prices of ABC, measuring essential reward and risk indicators, and comparing your investment's performance against a benchmark index. By the end of this course, you'll have a solid understanding of how to utilize Google Sheets to create effective monitoring tools that are widely used by traders and financial analysts in their everyday professional activities.



Understanding Financial Securities with ABC Stock


In the first section of the course, we delve into the world of financial securities using the hypothetical ABC stock as our primary example. You will learn how to source historical data for ABC, including its prices and dividends. This part of the course emphasizes the importance of historical data analysis in understanding market trends and making informed investment decisions. We will explore different methods to organize and present this data in Google Sheets, enabling you to gain insights into the stock's past performance and future potential.



Building and Analyzing Your Dashboard


The final part of the course focuses on building your own graphical dashboard in Google Sheets. This section is a hands-on experience where you apply the concepts learned to create a dynamic tool for monitoring the performance of ABC stock. You will learn how to implement various Google Sheets functions and tools to visualize data, calculate key risk and reward indicators, and compare ABC's performance with a benchmark index. The skills acquired in this section are not just applicable to ABC stock but can be transferred to any financial security, making you adept at creating versatile financial analysis tools.

Syllabus

  • Monitoring historical prices
    • In the first chapter, you’ll be introduced to the problem: you have a time series of monthly (historical) prices for the hypothetical stock ABC from which you have to extract some meaningful information. You’ll be given some definitions (what is a stock? what are dividends?), and at the end of the chapter, you’ll be able to graphically represent the evolution of a stock price over a specific period.
  • Monitoring historical returns
    • In this chapter, the core of the analysis will switch from historical prices to historical returns. You’ll learn (and compute) the main performance indicators of past returns, both in terms of reward and risk. Finally, you’ll be introduced to risk-adjusted performance measures: indicators that take into account both reward and risk.
  • Monitoring the distribution of returns
    • In this chapter, you'll look at the full distribution of historical returns. First, you’ll learn how to build a histogram to describe the distribution of historical returns. Second, you’ll be introduced to the Gaussian distribution, a commonly used model for stock returns. You'll visually inspect if the Gaussian model is reasonable for the ABC stock returns. Finally, you'll understand potential flaws with the Gaussian model.
  • Benchmarking performance
    • In this final chapter, you’ll benchmark ABC stock against a market index and verify whether ABC outperformed the benchmark or not. The comparison process will be done through several steps/metrics. First, you’ll analyze the cumulative wealth. Next, you’ll extend the comparison using different indicators such as Sharpe Ratio and Drawdown. Finally, you’ll examine the linear relation between ABC stock and the benchmark through the correlation coefficient. At the end of the chapter, you’ll be introduced to more powerful and advanced spreadsheet features that introduce interactivity in your analysis.

Taught by

David Ardia and Riccardo Mancini

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