This Company Just Launched a First of its Kind Behavioral Analysis Trading Tool - And You Probably Haven't Heard of It Yet

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Photo by Jason Briscoe on Unsplash

With the idea that gut instincts don’t build winning investments, OVTLYR launched equity portfolio solutions built on groundbreaking behavioral analytics. The company is running a free pilot for the rest of 2021, and its platform is currently used by thousands of investors looking to enhance their equity portfolios through in-depth behavioral analytics on over 1,300 highly liquid U.S.-listed equities. 

Despite certain criticisms that previous volatility is insufficient to predict future outcomes, Modern Portfolio Theory and variations thereof have been the standard for many advisors and asset managers. To their credit, several advisors make a point to gauge client risk and prevent inappropriate investments. Unfortunately, other market participants, left to their own devices, may influence broader market behaviors in irrational ways detrimental to their clients. Self-directed retail investors relying on gut instincts or delayed information are at an even further disadvantage. OVTLYR’s technology uses its proprietary behavioral data on nearly $50 trillion in total market cap to build unique portfolios designed to mitigate the risk irrationality poses to the market.

Let’s dive into the tool and how we all can benefit from it. Launch the OVTLYR dashboard and go to “My Portfolio,” where you can add up to 10 stocks and select your risk tolerance to build the portfolio. OVTLYR will suggest daily allocations for each included name along with any residual cash, depending on your chosen risk. Additional values that reference the stated account value and each asset’s previous close provide a quick reference for how many whole shares should be bought or sold to best achieve the stated allocations.

OVTLYR’s process is designed to mitigate uncertainty and risk resulting from irrationality-induced volatility. In other words, it works to compress drawdowns by situationally cycling allocations through selected assets and cash based on individualized behavioral data for each. The included backtest displays not only the direct outcome (assuming close-to-close pricing) against an evenly-weighted, fully invested basket of the same names but also highlights periods where “cash” allocations peaked. This indication can highlight excessive irrational behaviors at play among the chosen stocks.

Generally, the performance of OVTLYR compares well with that of a more passive buy and hold approach but with impressive reductions to exposure risk and drawdowns. Several industry standard metrics such as CAGRs, beta, Sharpe and Sortino ratios and others are also available in the backtest to compare against buy and hold results over the same period (4 prior years + current YTD).

In this example (built on Sept 27, 2021), we have built a portfolio with a risk tolerance between balanced and aggressive containing Charles Schwab Corp SCHW, JP Morgan Chase & Company JPM, Apple Inc AAPL, Microsoft Corporation MSFT, Amazon Inc AMZN, Facebook Inc – Class A FB, Tesla Inc TSLA, Netflix Inc. NFLX, Alphabet Inc – Class A GOOGL and Blackrock Inc. BLK.

Being able to backtest, analyze, and evaluate stocks using advanced techniques like this has historically been only accessible to a very small number of institutions and groups. OVTLYR represents a unique take on bringing more and better data and analytics to light.

By using behavioral data to create actionable insights, OVTYLR might be able to take a significant amount of research and guesswork out of investment decisions. Additionally, this is only the start — OVTLYR is still in its pilot program which you can sign up for free at ovtlyr.com/SignUp.

The future may be bright for innovative outliers like OVTLYR to create real value for investors and traders across the financial industry. As more of these tools become available to the average investor, the market may become even more democratized and accessible to many.  

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.