International Combo Model
The International Combo Model is designed to be a stock selection tool for investors in
non-US markets who need to analyze individual equities within specific country markets.
International Combo stock rankings represent forecasts of expected alpha versus the
company’s home market return.
Combo was Columbine’s first complete multifactor stock selection model; we created the US
model in 1985 and began publishing Combo Model rankings in 1986. We added
International Combo Model rankings in 1992, creating optimized, country-specific
versions of the model for markets outside the US. At first we could offer only
five country-specific versions of Combo rankings, but we now have International Combo Models
for more than thirty developed and developing market countries around the world. The
remaining smaller markets are covered by an Emerging Markets version of the model.
Recognizing the higher level of transactions costs generally experienced outside
the US, we optimize each version of the International Combo Model to achieve
superior risk-adjusted portfolio return at realistic levels of portfolio turnover.
The design process focuses on big-cap, highly-liquid, institutional-grade securities
like those that make up the major international indices. Our experience shows that
these issues are the most efficiently priced. Any multifactor model that can
successfully generate alpha in these securities will have no problem with smaller cap,
less efficiently priced companies.
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