Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Researchers Develop Index of Innovative Companies

02.04.2010
Portfolios Based on Index Outperform S&P 500

A study from the USC Marshall Center for Global Innovation co-authored by Gerard Tellis, Professor and Director of the Center and Andreas Eisingerich Assistant Professor at Imperial College London, has developed an index of innovative firms. Portfolios of top firms on this index appear to perform better than the S&P 500 in up markets and almost as well in down markets. The superior performance comes without excessive risk.

“The results suggest that innovation is a valid criterion of portfolio formation, just as the current criteria of size, value, growth, and price,” said Tellis.

The study’s sample is drawn from Fortune’s list of the 300 largest US firms and Business Week’s list of the 100 most innovative firms, between 2004 and 2008. The innovation index is based on five metrics that use objective market data as opposed to polling. All data are collected from public market sources by two independent research assistants under supervision of a statistician.

“Polls suffer from the tyranny of hype” says Tellis, “Names that get early recognition get greater visibility in the press, which accentuates their popularity, leading to a positive cascade in their favor.”

“A crucial aspect of this index is the link between innovation measured on this index and current and future financial performance,” says Tellis.

The superior performance holds not only in current year performance but also in one-year-ahead performance. “The ultimate test of an index is whether it can predict stock market performance a year ahead,” says Eisingerich. For example:

• In the five years between 2004 and 2008, an annual paper investment of $10,000 in a portfolio of top 20 firms in the Index yields a cumulative return that is 46% higher than the S&P 500 for concurrent years

• For one-year-ahead performance the increase in returns is 23% for the top 20 portfolio over the S&P 500

The authors are updating the study to include 2009 and 2010 data and plan to test the performance of the index on real investments.

The full-report and details of the findings are available at the Center’s website (http://www.marshall.usc.edu/cgi/innovation). Details of the method, metrics, & ranking of firms by year are available from the Center at innovation@marshall.usc.edu

Amy Blumenthal | Newswise Science News
Further information:
http://www.usc.edu

More articles from Business and Finance:

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Deep inside Galaxy M87

The nearby, giant radio galaxy M87 hosts a supermassive black hole (BH) and is well-known for its bright jet dominating the spectrum over ten orders of magnitude in frequency. Due to its proximity, jet prominence, and the large black hole mass, M87 is the best laboratory for investigating the formation, acceleration, and collimation of relativistic jets. A research team led by Silke Britzen from the Max Planck Institute for Radio Astronomy in Bonn, Germany, has found strong indication for turbulent processes connecting the accretion disk and the jet of that galaxy providing insights into the longstanding problem of the origin of astrophysical jets.

Supermassive black holes form some of the most enigmatic phenomena in astrophysics. Their enormous energy output is supposed to be generated by the...

Im Focus: A Quantum Low Pass for Photons

Physicists in Garching observe novel quantum effect that limits the number of emitted photons.

The probability to find a certain number of photons inside a laser pulse usually corresponds to a classical distribution of independent events, the so-called...

Im Focus: Microprocessors based on a layer of just three atoms

Microprocessors based on atomically thin materials hold the promise of the evolution of traditional processors as well as new applications in the field of flexible electronics. Now, a TU Wien research team led by Thomas Müller has made a breakthrough in this field as part of an ongoing research project.

Two-dimensional materials, or 2D materials for short, are extremely versatile, although – or often more precisely because – they are made up of just one or a...

Im Focus: Quantum-physical Model System

Computer-assisted methods aid Heidelberg physicists in reproducing experiment with ultracold atoms

Two researchers at Heidelberg University have developed a model system that enables a better understanding of the processes in a quantum-physical experiment...

Im Focus: Glacier bacteria’s contribution to carbon cycling

Glaciers might seem rather inhospitable environments. However, they are home to a diverse and vibrant microbial community. It’s becoming increasingly clear that they play a bigger role in the carbon cycle than previously thought.

A new study, now published in the journal Nature Geoscience, shows how microbial communities in melting glaciers contribute to the Earth’s carbon cycle, a...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Expert meeting “Health Business Connect” will connect international medical technology companies

20.04.2017 | Event News

Wenn der Computer das Gehirn austrickst

18.04.2017 | Event News

7th International Conference on Crystalline Silicon Photovoltaics in Freiburg on April 3-5, 2017

03.04.2017 | Event News

 
Latest News

New quantum liquid crystals may play role in future of computers

21.04.2017 | Physics and Astronomy

A promising target for kidney fibrosis

21.04.2017 | Health and Medicine

Light rays from a supernova bent by the curvature of space-time around a galaxy

21.04.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>