The origin of portfolios is in finance and describes a planning method of compiling a package of security papers (security holdings) dependent on to the criteria of return and risk. Later, this method has been applied to other areas in the 70ies. Since that time the portfolio analysis has been modified in many cases and is one of today´s widespread analysis and planning instruments of strategic management. The main idea of each portfolio is the segmentation and evaluation of data volume.
Basics of illustration
Most portfolios are illustrated two- or tree-dimensional. With three-dimensional illustrations the point size is the third value perspective next to the axes. You hardly see four-dimensional portfolios. Here the bubbles are segmented as circular chart next to their value based figure.
Basic requirements to all illustrations is, as always, the efficient legibility. This is manageable due to a fast visual comprehension to evaluate data by colouring of bubbles or using diverse symbols. Also marked segmentation criteria, such as lines, will support comprehension.
Scaling and value intervals
Other than the typical bar and variation diagrams the scales do not have to start necessarily with zero.
A deliberate choice of value interval is necessary, if the segmentation should be demonstrated reasonably.
In this context reasonable means all points are visible and do not waste space/room.
The more frequently a portfolio with diverse data sets is used, the more important is the deliberate choice of the scale. Note: often times a change of the software automation is necessary, as automated portfolio axes always start with zero in Excel. This is less beneficial if all of your data is between the value of 350 and 480.
Ledgends and captions
A special attention should be placed on the topic legends and captions. Mark/write directly at the relevant diagram components. That will increase the legibility immediately. Should you make the decision of using a three-dimensional portfolio, the value has to be written directly at the bubble as there is no scale for it.
Strategic management is unimaginable without portfolios. Every evaluation, every portfolio approach consists of strengths and weaknesses. But irrespective of the type and structure of each portfolio, the visualisation is key for a beneficial usage of this analysis tool. The mentioned universal criteria above are a good frame for portfolio illustrations.