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Using a Waterfall Chart to Show Portfolio Liabilities

Article Quant Q&A · Author: Řídící
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Summary

The document considers how to visualize a fund or portfolio that contains both positive-valued holdings and small negative items such as accrued fees or foreign-exchange hedging marks. The questioner prefers a pie-like representation and is looking for an alternative that can accommodate liabilities clearly.

The answer recommends considering a waterfall chart. This chart can show how positive and negative components add or subtract as they contribute to a total, making it a possible fit when a pie chart cannot naturally represent negative values. The document offers only this brief suggestion: it provides no example layout, comparison with other chart types, or guidance on ordering, labeling, or scaling components. Its usefulness is therefore as a visualization idea rather than a detailed design method; readers should assess whether the chart makes the portfolio composition and net total clear for their audience.

Key ideas

  • A pie chart is a poor fit when portfolio components include negative values.
  • A waterfall chart is suggested as an alternative for displaying positive and negative contributions.
  • The proposed chart can communicate how components combine toward a net total.
  • The document provides no implementation detail or comparison with other visualization choices.

Tags

Portfolio constructionRisk managementStatistics
Full text
# Pie-chart (or alternative) representation with negative values/liabilities


# Pie-chart (or alternative) representation with negative values/liabilities












I'd like to represent graphically/visually a fund/portfolio by something that resembles a pie chart. But... the fund/portfolio contains things that have negative value (think of liabilities such as: accrued fees, FX hedging marks etc.) These are relatively quite small (e.g., less than 10%).

How do I graphically present such a portfolio? I like the pie chart, but other suggestions are welcome too. However, I'm not super enthusiastic about a single column bar chart. I'm hoping for some ingenious find.

## Answer by Hartvigsen (score 2)

https://quant.stackexchange.com/a/18014

I would suggest you have a look at the waterfall chart: http://en.m.wikipedia.org/wiki/Waterfall_chart

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.