Unfortunately, comparing the returns isn’t a great way of evaluating the portfolio compared to the S&P 500. You should really be comparing their Sharpe ratios (or just annualized tstat). If you have, for example, 5% annualized returns on $x in excess of the risk-free rate, you can just double your pnl to 10% by borrowing $x more money and investing it (assuming you can borrow at a competitive rate). Why not do that? Well, you’ll also have more variance in your portfolio. Probably what you really care about is risk-adjusted returns.
The most common way to evaluate this is to compare the (daily mean returns)/(daily stdev returns), where maybe you adjust the first thing by the rate you can borrow money at.
(Eyeballing it, SPY was probably like 1.5-2x as good as the other portfolio by this metric.)
Happy to explain more if this is confusing or you’re curious and have other questions.
Edit: I see your other post/comment now that has a Sharpe ratio and portfolio that looked like it outperformed this one; maybe this isn’t new/interesting or useful, but I’ll leave it up in case someone else finds it useful.
Unfortunately, comparing the returns isn’t a great way of evaluating the portfolio compared to the S&P 500. You should really be comparing their Sharpe ratios (or just annualized tstat). If you have, for example, 5% annualized returns on $x in excess of the risk-free rate, you can just double your pnl to 10% by borrowing $x more money and investing it (assuming you can borrow at a competitive rate). Why not do that? Well, you’ll also have more variance in your portfolio. Probably what you really care about is risk-adjusted returns.
The most common way to evaluate this is to compare the (daily mean returns)/(daily stdev returns), where maybe you adjust the first thing by the rate you can borrow money at.
(Eyeballing it, SPY was probably like 1.5-2x as good as the other portfolio by this metric.)
Happy to explain more if this is confusing or you’re curious and have other questions.
Edit: I see your other post/comment now that has a Sharpe ratio and portfolio that looked like it outperformed this one; maybe this isn’t new/interesting or useful, but I’ll leave it up in case someone else finds it useful.