Quartiles – Calculating different quartiles

A quartile is a specific percentile. First, second, third quartiles are 25th, 50th and 75th   percentiles respectively. As discussed in the percentile calculations post  the position of the pth percentile item, i = (p/100) * n  where n is the total numbers in the data sample.
 
Calculate these quartiles as described in the post.  If a fund falls under top quartile (percentile greater than 75) is considered for investment.
 
March 19, 2010 | Filed Under Mutual Funds | Leave a Comment 

Mutual funds - Peer Group Quartiles

As detailed in quartiles and percentiles posts different quartiles are calculated for funds of the same sector. Once a specific quartile is calculated say 1st quartile i.e. 25th percentile all the funds which are low performing than the 1st quartile funds are considered to be under 1st quartile similarly the other quartile funds are also calculated.
 
Effectively the funds of same sector are categorized into 4 parts. Peer group quartile information tells us in which part a fund falls in. Obviously the value is always either 1,2,3 or 4. 
 
For investment decisions usually analysts think that a fund must perform consistently in such a way that it should be in the top quarter (high performing quarter, depends on the company how it treats different quartiles i.e. some companies treat 25th quartile as the 4th one and some as 1st one) continuously for 6-7 years etc.
 
Please read Peer group Ranking post as well.
 
 
March 19, 2010 | Filed Under Mutual Funds | 1 Comment 

Mutual funds - Peer Group Ranking

Investment research companies like Morningstar collect data from different fund houses. They categorize the funds into different sectors. A fund can be compared only with the funds of the same category because risk profile and investment objective match for the funds of the same sector.
 
Morningstar receives fund holdings and calculate performance of the funds, arranges funds of same sector in descending order of performance i.e. high performing fund at the top and assigns rank. Peer group ranking is the position of a fund compared to the peers of the same sector. 
 
This is useful to the investors and investment analysts as they can make investment decisions based on the position of a particular fund relative to the other funds of the same sector. 
March 19, 2010 | Filed Under Mutual Funds | Leave a Comment 

Percentile – Calculating Percentile

This is widely used in calculating the positions of students participated in entrance exams, though the calculations vary slightly.

The pth percentile of a data set is a value such that at least p % of the items in
the dataset have a value equal to or less than the value of the data item. It also means that
(100 - p) % of the items have a value more than the value of the data item.

Calculating Percentile
Percentile can be calculated using the following approach:

Arrange the data in ascending order.
The position of the pth  percentile item, i = (p/100) * n where n is the total numbers in the data sample.
If i is not an integer, round up. The pth percentile is the value in the ith position.
If i is an integer, the pth percentile is the average of the values in positions ‘i’ and ‘i +1’.
 
Calculating 90th Percentile

Consider the below sample of data.

5,6,2,3,4,4,4,5,8,9 

Arrange the data in ascending order

2,3,4,4,4,5,5,6,8,9

i = (p/100) * n = (90/100) x 10 = 9

Averaging the 9th and 10th data value you get 90th percentile = (8 +9)/2 = 8.5

March 14, 2010 | Filed Under Basic Mathematics | Leave a Comment 

Median and Mode

Median: The median of a data set is the value in the middle when the data items are arranged in ascending or descending order. If there are an odd number of items, the median is the value of the middle item. If there is an even number of items, the median is the average of the values for the middle two items.

Consider the below sample of data.

5,6,2,3,4,4,4,5,8,9

Arrange the data in ascending order

2,3,4,4,4,5,5,6,8,9

Median = (4 + 5 )/2 = 4.5

Mode
Definition: The mode of a data set is the value that occurs with greatest frequency or is the value that is repeated most often in the data set.

In the above example 4 is repeated thrice. So 4 is the Mode of the sample data.

March 14, 2010 | Filed Under Basic Mathematics | Leave a Comment 

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