Sector Allocation Divergence Index (SADI)
This blog post introduces the Sector Allocation Divergence Index (SADI), a newly added portfolio measure available from actionList.Pro™. It helps monitor the degree of fit between the stock market’s sector-level exposures and those resulting from established actionList stock positions.
June 12, 2025 02:58:02 PM ET
PONTE VEDRA, FL --(actionList.Pro LLC)-- Stock market participants often speak of being over- or underweight industrial sectors, but just a few tools identify the degree to which a given portfolio's sector-level allocation is aligned with that of the overall stock market. SADI is a simple, transparent and descriptive metric that achieves just that. Calculated as half the sum of absolute differences between a given portfolio's and the market's sector weights, SADI delivers a percentage value that reflects overall alignment, or divergence, from the market. SADI is available in actionList.Pro’s induCaps panel. (See Image 1)
Image 1 - Sector Allocation Divergence Index
A SADI of 0% suggests the portfolio exactly mirrors the stock market's sector weightings. Higher values reflect an increasing bias away from the stock market's sector weightings, intentional or not. E.g., a portfolio with a SADI of 5% is closely aligned with the stock market's overall sector composition, while a reading of 45% may signal a strong conviction or unintended concentration risk. Expressed in terms of dollars, SADI indicates the amount of the portfolio's value that is positioned away from the stock market's sector-level distribution, highlighting how much is structurally over- or under-weighted relative to the benchmark. Over time, even passive strategies like "let winners run" can cause SADI to rise, offering quiet notice of accumulating divergence.
SADI isn't a replacement for performance or volatility measures; instead, it complements them. It serves as a clean reference point for comparing portfolio structure, tracking drift, and understanding how much active sector exposure is really at work. SADI is now available as a metric for all stock positions monitored at actionList.Pro, giving users a practical tool to assess alignment with, or divergence from, the stock market's sector level allocations.
If you enjoyed learning about actionList.Pro's Sector Allocation Divergence Index, consider this your invitation to register for a no-strings-attached free trial, available at: www.actionlist.pro. And don't forget to share this post with a friend! For updates and news from actionList.Pro, subscribe to the actionList.Pro RSS Feed.
About actionList.Pro
actionList.Pro™ serves as an integrated watchlist platform that positions its customers to independently monitor risk and reward attributes associated with individual stocks, or stock positions, and efficiently draw insight from across perspectives that scale from high-level capital market factors to industrial index and stock-specific price trend strength indicators. It allows for monitoring activities to take place within the context of an informational framework consisting of risk and reward related measures with the potential to drive change, and serves as an enabling technology that provides its customers with meaningful time savings while deepening their stock market insights.
Source: actionList.Pro LLC
Hashtags: #actionlistpro #industrial #sectors #stocks #stock_market #sadi #portfolio
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