| 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:
- Estimate pairwise correlations among all equity positions
- Identify correlation clusters — groups of 3+ holdings with average pairwise correlation > 0.7
- Calculate the effective diversification ratio — how many truly independent bets the portfolio contains
- 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:
- Health Score — 0–100 composite score across all dimensions
- Critical Issues — Problems requiring immediate attention
- Warnings — Issues to monitor or address opportunistically
- Strengths — What the portfolio does well
- Improvement Actions — Prioritized, specific recommendations with rationale
- 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.
