How Clavix grades stock risk
Clavix turns each stock into a single risk grade from A+ to F by scoring five independent dimensions from 0 to 100 and combining four of them into one composite. Grades refresh every trading day. Nothing is averaged in the dark: every dimension is visible, the one that is left out of the number is named below, and every grade can be traced back to the inputs behind it.
The five risk dimensions
Clavix takes five reads, each scored independently so a weakness in one does not hide behind strength in another. Four of them are weighted into the grade. The fifth, financial health, is measured and shown but carries no weight. The exact weighting is published further down, with the reason. On all five, a higher score means lower risk.
1. Financial health
The strength of the underlying business: balance-sheet quality, profitability and margins, and cash-flow durability. Drawn from company financials and filings.
This dimension is not weighted into the grade. Tested against forward risk over six separate windows, it ordered stocks backwards: the names it scored as financially healthy were not the ones that went on to behave more calmly. Clavix shows the read, because it is worth knowing, and leaves it out of the number.
2. News sentiment
Recent, company-specific news, scored for whether it carries a real positive or negative implication for the business. Generic market roundups and pure price recaps are filtered out. Each scored article is sourced and timestamped.
3. Macro resilience
How well the stock holds up against the macro backdrop: the broad equity market, the 10-year Treasury, credit spreads, the dollar index, and equity-market volatility. A name that swings hard with forces outside its control scores lower here than one that shrugs them off. The underlying measurement is exposure, and the score is turned around so that, as on every other dimension, higher means lower risk.
4. Sector resilience
How the stock's sector is holding up relative to the broad market. A strong company in a sector under pressure inherits some of that pressure.
5. Price stability
The behavior of the stock itself: drawdown depth and volatility. Sharp, deep, erratic moves read as higher risk than steady ones.
From the dimension scores to one grade
The four weighted dimension scores are combined into a single composite from 0 to 100, then mapped to a fixed letter grade. Because the mapping is fixed, the meaning of a grade never drifts: a B today means the same thing a B meant last month.
The weighting, in full
| Dimension | Weight in the grade |
|---|---|
| Price stability | 0.55 |
| Macro resilience | 0.25 |
| News sentiment | 0.10 |
| Sector resilience | 0.10 |
| Financial health · measured and shown, not weighted | 0.00 |
These are fitted, not chosen to look balanced. Each dimension was measured against forward risk on six disjoint windows, three forward risk metrics each, and the weighting was scored leave-one-window-out so that it is never graded on the window it was fitted on.
The best-fitting vector is not the one above. Left unconstrained, it is price stability 0.80 and macro resilience 0.20, with news sentiment and sector resilience at zero. Giving those two 0.10 each costs 0.0119 of mean rank correlation, against a window-to-window spread of 0.11, which is a difference this corpus cannot resolve either way. Clavix takes that cost deliberately: the product opens five evidence drawers on every grade, and three of them should not be decoration.
Financial health is the one dimension measured to run backwards. Its published score ordered stocks the wrong way against forward risk, with an interval excluding zero, and so did four of the five raw inputs behind it. It keeps its scorer, it keeps its place on screen, and it carries no weight in the grade until it can be rebuilt on data the product does not yet have point-in-time history for. Publishing a zero next to it is the honest version of that.
The grade scale
- A 80–100 · Low risk. Steady fundamentals, calm price behavior, little macro or sector drag.
- B 65–79 · Solid. Sound overall with one or two softer dimensions.
- C 50–64 · Average. A mixed picture; risk is real but not acute.
- D 35–49 · Elevated risk. Multiple dimensions are weak.
- F 0–34 · Distressed. Broad, serious risk across the model.
A+ A- B+ B- Each tier has plus and minus steps inside it, for thirteen grades in all.
How often grades update
Clavix regrades its universe of 1,017 US stocks and ETFs every trading day, and each subscriber's morning brief is generated before US market open. See current grades on any name in the stock risk directory, or read what Clavix is.
What a grade is, and is not
A Clavix grade is a risk indicator for educational purposes. It is not investment advice, not a recommendation to buy or sell, and not a prediction of return. A high grade does not mean a stock will go up, and a low grade does not mean it will go down. It means the risk, as Clavix measures it, is lower or higher today.