Visualizing Sector Contributions to Portfolio Returns Over Time

Summary

The document presents chart options for examining how ten sector returns contribute to a portfolio over time. One approach is to compound each sector’s returns separately, starting each cumulative series at one, and plot the resulting lines against dates. This allows comparison of each sector’s cumulative performance and its path over the period.

For a more compact view, the responses suggest showing final cumulative contributions as segmented bars, potentially broken out by year; a pie chart is mentioned but discouraged. Stacked area charts, including a 100% stacked version, are also proposed. The material offers visualization ideas rather than a tested comparison or a formal accounting method. It does not explain how to reconcile compounded sector series with portfolio returns when contributions interact or how to handle cash, so chart choice should reflect the intended interpretation of the contribution data.

Key ideas

• Compound each sector’s returns through time and plot the cumulative series as separate lines.
• A line chart helps compare sector performance and see how it develops over time.
• Segmented bars can summarize final cumulative contributions, with separate bars for annual periods.
• Stacked area charts are another option, while pie charts may be less clear.

Tags

# Portfolio Return Contribution by Sectors


# Portfolio Return Contribution by Sectors












I have a table containing the following fields:

Date, PortfolioReturn, CashReturn, Sector1Return,...,Sector10Returns

'PortfolioReturn' is the sum of CashReturn + return contributed from 10 market sectors.

What are some of the industry standard ways to visually present the return contribution by sectors over time?

## Answer by Alex C (score 1)

https://quant.stackexchange.com/a/18344

I would make a cumulative return chart, using a different color for each sector. Each line starts at 1, and each successive point is found by multiplying the previous point by (1+SectorReturn) for that sector. The horizontal axis shows dates. By looking at the lines on this chart you get a visual feel for what sectors performed best overall and also the pattern over time of sector returns.

## Answer by user25064 (score 1)

https://quant.stackexchange.com/a/19304

I think that the approach suggested by @Alex is pretty standard and I have seen such charts before but for a less orthodox approach that may clean up the graphics a bit, you might consider the final cumulative return as a segmented bar or pie chart (though I might discourage pie chart). See this example of a segmented bar for what I'm talking about. Each bar could be an annual period.

You may also consider a 100% stacked area, or simple stacked area chart again on cumulative returns.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

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