ROP investors treading cautiously as performance is muted

ROPER TECHNOLOGIES INC was among the worst performers on Friday. It lost -0.84% to close at 284.82. On a day when the overall market breadth was 35%, it closed higher than 7% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing ROP]

Buy-and-Hold investors in ROP experienced a maximum drawdown of -15.44% over the last three months. It lost -7.0% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

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Monthly Performance

Alpha (outperformance)

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Return distribution

ROP has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, ROP outperformed the SP500 index on 54% days.

During the last three months ROP was mostly loss making and delivered on average -0.1% per day. It's best return during this period (of +7.55%) was on Friday, 26 Oct, 2018. While it's worst loss in the same period (of -4.78%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -8.62% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 9 Nov, 2018. This bullish trend delivered +6.76% to investors.

ROP had 6 profitable and 6 loss making months over the last year. During the last year, ROP underperformed SP500 index on monthly return basis. ROP significantly outperformed SP500 index in Jul 2018, when it returned +9.94% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ROP had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both ROP and SP500 index significantly outperform during months when quarterly/annual results are announced.

Risk comes from not knowing what you're doing.
-- Warren Buffett

ROP is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ROP's volatility from 11 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ROP has significant positive skewness in it's return distribution. This indicates that investors can expect ROP to recover from drawdowns quickly. Which makes ROP a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than ROP. Therefore, SP500 must receive a lower allocation than ROP in your portfolio. SP500 index usually has shorter drawdown period than ROP.

On a general note (since you are interested in ROP), three small cap instruments that deserve special mention are ZBRA, AAXN and BURL. They have all outperformed the market and must be closely watched for investment opportunities.