portfolio-health-check

name	portfolio-health-check
description	Diagnose risks and inefficiencies in an existing investment portfolio. Use when the user asks to review, audit, or stress-test their current holdings, evaluate portfolio concentration, check factor exposures, assess correlation risks, identify hidden tilts, or get actionable improvement suggestions for a portfolio they already own.
license	Apache-2.0

Portfolio Health Check

Act as a portfolio risk diagnostician. Evaluate an existing investment portfolio to identify hidden risks, concentration issues, factor tilts, correlation clusters, liquidity gaps, and stress-test vulnerabilities — then provide actionable improvement recommendations.

Workflow

Step 1: Ingest the Portfolio

Collect the user's current holdings:

Input	Required	Format
Holdings list	Yes	Ticker + shares/dollars or percentages
Cash position	Yes	Dollar amount or percentage
Account type	No	Taxable / IRA / 401(k) / Mixed
Benchmark	No	Default: S&P 500 (SPY)
Risk tolerance	No	Conservative / Moderate / Aggressive
Time horizon	No	Years

If the user provides incomplete data, ask clarifying questions. Normalize all positions to percentages of total portfolio value.

Step 2: Concentration Analysis

Assess concentration at multiple levels. See references/diagnostic-framework.md for thresholds.

Dimension	What to Check	Red Flag
Single-stock	Any position > 10% of portfolio	> 15% is severe
Top-5 concentration	Combined weight of top 5 positions	> 50% is high
Sector	GICS sector weights vs benchmark	Any sector > 30%
Geography	US / International / EM split	> 90% single-country
Market cap	Large / Mid / Small / Micro	> 85% single segment
Asset class	Equity / Fixed income / Alternatives / Cash	> 90% single class
Style	Growth vs Value tilt	> 75% single style

Step 3: Correlation Cluster Detection

Identify groups of holdings that move together:

1. Estimate pairwise correlations among all equity positions
2. Identify correlation clusters — groups of 3+ holdings with average pairwise correlation > 0.7
3. Calculate the effective diversification ratio — how many truly independent bets the portfolio contains
4. Flag positions that appear diversified by name/sector but are actually highly correlated

Step 4: Factor Exposure Analysis

Decompose the portfolio into factor exposures:

Factor	Metric	Benchmark Neutral
Market beta	Portfolio beta vs S&P 500	1.0
Value	Weighted avg P/E, P/B	Benchmark average
Growth	Weighted avg revenue/earnings growth	Benchmark average
Size	Weighted avg market cap	Benchmark median
Momentum	Weighted avg 12-1 month return	Benchmark average
Quality	Weighted avg ROE, debt/equity	Benchmark average
Volatility	Weighted avg realized vol	Benchmark average
Dividend yield	Weighted avg yield	Benchmark average

Flag any factor exposure that deviates > 1 standard deviation from the benchmark.

Step 5: Risk Metrics

Calculate portfolio-level risk metrics:

Metric	Description
Portfolio volatility	Annualized standard deviation
Beta	Sensitivity to benchmark
Tracking error	Volatility of active returns vs benchmark
Active share	Percentage of portfolio differing from benchmark
Value at Risk (95%)	1-year loss at 95% confidence
Expected shortfall (CVaR)	Average loss beyond VaR
Maximum drawdown estimate	Based on historical allocation analysis
Sharpe ratio estimate	Expected excess return / volatility
Sortino ratio estimate	Excess return / downside deviation

Step 6: Stress Testing

Run the portfolio through historical stress scenarios. See references/diagnostic-framework.md for scenario details.

Scenario	Period	Key Characteristics
Global Financial Crisis	2007–2009	Credit freeze, equity -55%, correlations spike
COVID Crash	Feb–Mar 2020	Rapid -34%, V-shaped recovery
2022 Rate Shock	2022	Bonds & stocks fall together, growth crushed
Dot-Com Bust	2000–2002	Tech -78%, value outperforms
Inflation Shock	1973–1974	Stagflation, broad equity -45%

For each scenario, estimate portfolio impact and recovery timeline.

Step 7: Liquidity Assessment

Evaluate portfolio liquidity:

Metric	What to Check
Days to liquidate	How long to exit each position at 20% of average daily volume
Illiquid positions	Holdings where full exit takes > 5 trading days
Bid-ask spreads	Positions with typically wide spreads
Concentration in illiquid names	Percentage of portfolio in low-volume stocks

Step 8: Diagnosis and Recommendations

Synthesize findings into a health report. Format per references/output-template.md:

1. Health Score — 0–100 composite score across all dimensions
2. Critical Issues — Problems requiring immediate attention
3. Warnings — Issues to monitor or address opportunistically
4. Strengths — What the portfolio does well
5. Improvement Actions — Prioritized, specific recommendations with rationale
6. Rebalancing Suggestions — Concrete trades to improve the portfolio

Data Enhancement

For live market data to support this analysis, use the FinData Toolkit skill (findata-toolkit-us). It provides real-time stock metrics, SEC filings, financial calculators, portfolio analytics, factor screening, and macro indicators — all without API keys.

Important Guidelines

• Diagnose, don't reconstruct: This skill evaluates an existing portfolio. If the user needs a new portfolio from scratch, direct them to the Risk-Adjusted Return Optimizer.
• Context matters: A 100% equity portfolio is fine for a 25-year-old with a 40-year horizon. Concentration that looks alarming in isolation may be appropriate in context.
• Tax awareness: In taxable accounts, recommend improvements that consider tax implications of selling. Suggest tax-loss harvesting where applicable.
• Behavioral sensitivity: Don't suggest massive overhauls. Investors have emotional attachment to holdings. Prioritize the highest-impact changes.
• Benchmark appropriateness: A retiree's portfolio shouldn't be benchmarked against the S&P 500. Choose benchmarks that match the investor's goals.
• Not personalized advice: Disclaim that this is educational analysis, not personalized investment advice. Individual circumstances require a qualified financial advisor.