Model Comparison Tool
When reviewing models on the Models page, you may want to compare multiple models to decide what is most suitable for you or your clients. You can easily do this by clicking the Compare Models button in the top right corner of the Models page.
This page allows you to pull up the model information panes for multiple models at once. Select your models on the left side of the screen by searching for them or choosing them from lists of NDW models, your Custom Models, or your favorited models and then click Compare.
The order of the models will match the order in which the models were selected. For example, in the above screenshot, the box for the NDX model was checked first followed by the Blue Chip model, so the model information for the NDX model appears first.
The model selection section can be collapsed to allow you to focus on the model information. There is no limit to the number of models that can be selected for comparison, but you may be required to zoom out on your screen to view them all or scroll across the list to compare several models at once.
The data tabs match the options when a model information pane is opened on its own. Additionally, diving into any of the underlying information for one model will expose that information for all models in your comparison. For example, below I clicked the 2022 on the returns tab for the NDX model to show 2022 monthly returns for the NDX model, and the 2022 monthly returns automatically opened for the other two models as well.
Once you are done comparing your models, you can click the Back button in the top right corner to return to the Models page.
Model Comparison Tool In Practice
The model comparison tool may be especially useful for comparing similar models with slightly different rulesets. Common uses include comparing existing NDW models to one another, comparing multiple versions of a Custom Model you are testing, or comparing an NDW model to your custom version of that model you are attempting to tweak to better fit your situation.
For example, the below comparison looks at 3 different versions of the FSM American Funds model. The only difference in the 3 is how they approach downside protection via use of cash components.
The first model, the FSM American Funds 5S Model has no built in cash component, so it will remain fully invested at all times.
The second, the FSM American Funds 5S MMPR50 Model uses our MMPR50 cash trigger, which will rotate to cash when Money Market as an asset class strengthens relative to other asset classes.
The third, the FSM American Funds 5S PR4050 Model uses our PR4050 cash trigger, which will rotate to cash when Money Market strengthens and Domestic Equities simultaneously weakens relative to other asset classes.
In this case, since the only difference is the approach to downside protection, you may choose to look at how effectively these models seem to navigate market corrections by looking at things like Maximum Drawdown or Upside and Downside Capture and risk-adjusted returns like the models' Sharpe Ratio.
You could also use the annual returns to judge how each has handled various market corrections in the past. How did each model fare in 2000-2002, 2008, and 2020 when there were historically large corrections in the market? And similarly, how did the models handle a year like 2019 when more sensitive cash triggers led certain models to flip to cash and miss a quick market rally that models with less sensitive cash triggers were able to participate in?
Looking at situations like this and asking yourself what type of model you are looking for can be an effective way of deciding what is most appropriate for your situation. In this case, you might ask yourself if you want model that is more sensitive to volatility in an attempt to combat most downside situations, something that is less sensitive to ordinary volatility but may help navigate large, extended drawdowns like 2008, or if you might be willing to stay invested and weather periods of volatility in an attempt to participate in more of the upside.
Returns Quilt
You can also use the returns quilt to compare model returns side-by-side, and the Model Comparison tool makes this easy to accomplish.
Once you have selected your models on the Model Comparison page, you can hit the Send to... button in the top right corner to send those models directly into a quilt.
In the pop-up window, select Quilt and then click Save to generate your quilt.
This will allow you to compare up to 15 years of annual returns to see which model among your list performed best each year over that period. Additionally, this page shows trailing 3, 5, 10, and 15 year returns so you can compare their performance over multi-year periods as well.
You can also easily add a benchmark, other securities, or more models by entering them in the Symbols box and clicking Update Quilt.
Lastly, you can lock a ticker across the middle of the quilt, so you can see which models outperformed or underperformed that ticker in any given year. For example, the below quilt locks SPX in place so you can judge when each model performed better or worse than the market on average.