An Experimental Study of Financial Portfolio Selection with Visual Analytics for Decision Support

We investigate the decision process as applied to the practical task of choosing a financial portfolio. We developed PortfolioCompare, an interactive visual analytic decision support tool that helps the consumer quickly create, compare and choose among several portfolios consisting of different financial instruments. PortfolioCompare facilitates the analysis of risk and return aspects of each portfolio considered. We investigate behavior in this task using an economic experiment in which the user actively creates and compares portfolios from a set of funds. We elicit risk preferences using a separate task and find that subjects using PortfolioCompare make decisions that are closer to their risk tolerance as compared to subjects presented with similar information in textual form. This finding suggests that PortfolioCompare helps understand risk aspects of portfolios. Portfolio selections are improved during the course of the decision process, suggesting that this tool is valuable for decision support.