An improved Magic Formula based on academic studies
Did you know that there's a version of the Magic Formula that significantly outperforms the latter by using a different quality and price metric? Wesley Gray and Tobias Carlisle found that by making some small tweaks to the formula, the yearly return can be improved by more than 2.5 percentage points. Our new custom factors functionality makes it easy to create customizations of the Magic Formula, so we published this screen as a template. Read more about it here.