Our enduring focus at Stockopedia is to serve the interests of individual investors, the majority of whom are primarily interested in their own local stock markets. As a UK founded company, we started off serving a broad base of UK subscribers who were focused on the amazing breadth and diversity of stocks on the London Stock Exchange. The StockRanks were originally designed to serve our UK subscriber base by ranking across the UK stock market alone. This local ranking universe has proven extremely popular but also highly effective, as evidenced by the great performance results since the StockRanks were conceived in 2013.
As we’ve grown our coverage internationally, our stock market universe has grown - to Europe, American and now to Asia, Canada and Australasia - but we’ve been determined not to lose this local focus for the StockRanks, not only for UK investors, but for local investors in any market around the world.
We’ve designed the StockRanks to work ‘fractally’ - with every stock ranked locally, regionally and globally - to provide the best solution no matter what your investment universe.
We provide 3 versions of the StockRank for every company on Stockopedia. Every stock is ranked against three market sets:
- Its local ranking market set, which may be its own country (e.g. US) or a set of close regional countries (e.g. for small countries like Luxembourg) depending on the home market size. (See below for details). This is the default and recommended StockRank setting for most use cases.
- Its regional ranking set, following broad geographic regional areas. For example: Europe, North America, Asia, Australasia.
- Its global ranking set, with every stock ranked against every other listed stock in the world.
These settings can be changed permanently from your ‘Site Settings’ page available from the personal dropdown menu (top right of the site). So if you’d rather use regional or global StockRanks as default you may do so.
On StockReports, any subscriber may toggle temporarily between the local, regional and global StockRanks by using the dropdown menu above the StockRanks. This provides a useful mechanism to see if your favoured stocks really rank as well versus the rest of the world as they do within your own market. After all, your home market may be overvalued !
The majority of subscribers will not need to play with these StockRanks settings as they are primarily interested in their own local markets. If though you are a regional or cross regional subscriber here are some guiding notes.
The ‘local’ StockRanks are best used:
- When you are a single market subscriber (e.g. a UK subscriber, or a German subscriber etc).
- When viewing a StockReport and you wish to analyse it against its local market set (e.g. it’s often best to compare a UK stock against the UK market).
The ‘regional’ StockRanks are best used:
- When you are a regional subscriber (e.g. Pan-European subscriber).
- When screening or comparing a stock against other stocks in its region.
The ‘global’ StockRanks are best used:
- When you are a global or cross-regional subscriber.
- When screening or comparing a Stock against stocks in different regions.
The ranks for all three are highly correlated, but it should not be unexpected that the difference between local and global StockRank can be more than 10 percentile ranks.
If you are a global subscriber and have set your preferred StockRank to ‘local’ and screen the market for 95+ ranked stocks you will need to understand your results. Your results will return the “top 5% of stocks ranked against their own local markets” joined together. That can of course be an extremely useful but it may not be what you are looking for.
If you are looking for the top 5% of ranked stocks ranked against the global universe then it’s better to use the ‘global’ StockRank.
It is worth noting here that some recent academic research has shown that factor investing works better when done regionally, than when done globally. So for our own investing, we are more likely to use the local or regional StockRanks even if screening globally. But each to their own of course !
A local rank does not however necessarily mean just relative to a single exchange or country. Our decision as to whether or not to group local countries together was influenced by three primary factors:
- Market size - to ensure small countries were not ranked alone, but as satellites within larger sets. It doesn’t make sense to create a percentile rank for stock markets as small as Luxembourg, or as small as the Netherlands with just 130 stocks. We have aimed to maintain between 1,000 and 3,500 stocks within each local ranking set to ensure that percentile rankings are meaningful and more likely to be effective.
- Market Classification - using developmental data from the World Bank and other public sources to ensure only close and coupled economies are grouped together. There is always some judgement used in drawing sensible boundaries.
- Geographic proximity - Given that most investors are familiar with nearby economies, it makes sense to rank stocks within close regional sets.
After much research we settled on the following ranking hierarchy (global, regional, and local ranking sets) across geographies:
Global (comprising 4 regions so far) Region 1: North America (2 local ranking sets)
- United States
- Canada Region 2: Europe (7 local ranking sets)
- Northern Europe (Iceland, Norway, Sweden, Finland, Denmark)
- British Isles (UK & Ireland)
- Western Europe (France, Belgium, Netherlands, Luxembourg)
- Central Europe (Germany, Switzerland, Austria)
- Southern Europe (Spain, Portugal, Italy, Greece)
- Central Eastern Europe (Poland, Hungary, Romania, Czech Republic, Slovakia, Latvia, Lithuania, Estonia)
- South Eastern Europe (Bulgaria, Croatia, Slovenia, Cyprus, Bosnia, Macedonia, Serbia) Region 3: Asia (3 local ranking sets)
- Asian Tigers (Hong Kong, Singapore, Taiwan, Korea)
- India Region 4: Australasia (1 local ranking set)
- Australasia (Australia, New Zealand)
As we add more markets to Stockopedia - both in these regions and in new regions including Africa, Middle East and South America - these sets may be liable to change.