Z Score
Select Equity |
Z Score | = | Sum Of | | 5 Factors |
Z Score In A Nutshell
A Z Score is a data point that serves many purposes and one of them is to determine the probability of a bankruptcy within the next 24 months. With this, there are 5 different data points that are used in the equation and are weight according to an algorithm by Professor Edward Altman.
When looking at a potential investment, it is important to weigh as many important factors as you can. From cash flow, to revenue, all the way to probability of a bankruptcy, these are important data points that can factor into your decision making.
Closer Look at Z Score
Another way to use the Z Score is looking at the mean of your data set. The Z Score can be both positive and negative, giving you an answer that is quantifiable. Using the Z Score is also used in connection with standard deviation and that is a powerful tool in the investing and trading world.
Either way you decide to use this data point, it is important to understand what you are using it for and why. You can use it in relation with standard deviation or use it in relation to the health of the company you a researching. Company health is key because you are looking to make money over the long term and not have to worry about the performance of the company.
This is where joining an investment or trading community would be a great way to see how other people may be using this in their current trading and investing situations. An investing professional will also know how to use this so if you get stick you can reach out to them. Statistics in trading and investing can give you a good direction of where the market is going and if it is in your best interest to invest.
You also have to look at the chart and understand the human element because the Z Score may ignore that element and it is just as important. If the market is scared and the company is doing well, the stock may still drop in price and you have to identify that in your research. Overall, this is a great tool to use in your analysis of a company but be sure to open a demo account and test it there to ensure it fits your current method.
All Fundamental Indicators
Building efficient market-beating portfolios requires time, education, and a lot of computing power!
The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.
Try AI Portfolio ArchitectOther Consideration for investing
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
FinTech Suite Use AI to screen and filter profitable investment opportunities |