Ranking-based is an allocation method that sorts a strategy's holdings by a ranking metric you choose, splits the sorted list into ten rank tiers, and pays each tier the relative weight you set for it. The sort is redone at every rebalance, so weight follows rank rather than a particular instrument: one that climbs the ranking gains weight.
Also seen as: rank weighting, decile weighting
How does Fincanva handle it?
- It works at both levels: inside a strategy it ranks instruments, inside a Combined the member strategies — see Combined weighting.
- Ranking-based is included from the Starter plan, at the strategy level and inside a Combined alike; the Free plan does not offer it in either place. See what each plan includes.
- The default ranking metric is Price Change.
- A fresh setup starts on the Equal Weight preset — the same weight on all ten tiers — so it invests from the start, evenly whatever the rank; apply another preset or type your own numbers to make the ranking tilt it. Clear returns every tier weight to 0.
- The presets are Equal Weight, Balanced Top Tilt, Strong Top Tilt, Top 3 Equal, Top Decile Only and Linear Decay, plus the advanced Soft Exclusion, Top Half Tilt, Contrarian / Inverse Rank and Barbell.
- Inside a strategy each of the ten tier weights accepts −999 to 999, decimals included. A number outside that range is not changed for you: the field shows "Enter a rank weight between -999 and 999." until you correct it.
How does Ranking-based assign weights?
It ranks every candidate by the selected metric, highest value first, then pays each tier the weight you typed for it. The tiers are deciles: Tier 1 is the top 10% of the ranked list and Tier 10 the bottom 10%. Weights are relative — "Weights are relative — any number from -999 to 999, decimals allowed. A negative weight holds that tier short." They are normalised to 100% of the sum of their sizes, so 50/30/20 and 5/3/2 describe the same allocation and a negative weight counts by its size. A tier at 0 receives nothing, which drops the weakest ranks entirely; a negative tier is held short, its direction given by the sign.
The sort is always highest-value-first, whatever the metric measures: rank on Volatility and Tier 1 holds the most volatile instruments, not the calmest.
What does the shape of the rank weights change?
How concentrated the strategy is, independently of the metric. A steep drop from Tier 1 to Tier 10 pushes most capital into the best-ranked names; a flat set makes Ranking-based behave like equal weighting. A curve that zeroes the bottom half acts as a filter as well as a weighting. Fincanva describes what each shape does; it does not recommend a shape or a metric.
Which ranking metrics can you choose?
Five inside a single strategy; a Combined offers the same list without P/E Ratio.
| Ranking metric | Sorts on | Reads the calculation window? |
|---|---|---|
| Price Change | recent price change | yes |
| Average Momentum | average momentum | no |
| Volatility | volatility | yes |
| Sharpe ratio | Sharpe ratio | yes |
| P/E Ratio | price-to-earnings ratio | no |
Changing the calculation window therefore leaves Average Momentum and P/E Ratio rankings unchanged. With Volatility the window is a choice of 1, 2, 3, 6, 12, 18 or 24 months, the only lengths the engine accepts for it — see which window lengths you can choose.
Average Momentum ranks on average momentum — the average of an instrument's percent price change over 1, 3, 6 and 12 months. It blends several spans instead of reading one window, which is why it ignores the calculation window. An instrument is not ranked on it until it has 12 months of price history, and because three of the four spans are long, its rank moves more slowly than its price.
What happens if every tier weight is zero?
The setup invests nothing. Fincanva lets you save it, but the totals line reads "Total raw: 0 · Invests nothing — every weight is zero" and the strategy alert to review "Everything stays in cash" appears — "This allocation invests nothing: every weight is zero, so no capital goes anywhere." Clear produces exactly this state, so the alert shows until you apply a preset or type a weight.
What happens with fewer than ten instruments?
With fewer than ten picked instruments and no entry screener, the engine reads one tier per instrument from Tier 1 down: with 5 instruments Tiers 6 to 10 are never used, negative ones included, the totals line counts only the read tiers and the rest show 0%. Two alerts to review say so:
- When unread tiers carry a weight, "The engine uses only part of your weights": "With 5 instruments the engine uses only the first 5 levels and the later weights do not count, negative ones (short sales) included: reduce the levels or add instruments." It stays silent when all ten tiers carry the same weight.
- When the read tiers are all zero, "Everything stays in cash": "With 5 instruments only the first 5 ranking levels count and they are all zero, so nothing is invested." — and the totals line reads "Total raw: 0 · Invests nothing — the first 5 levels are zero".
With an entry screener the number of candidates is known only at each rebalance, so neither alert is raised.
What does it look like in practice?
A strategy holds ten instruments and ranks them by Price Change over a 12-month calculation window, so there is exactly one instrument per tier. You type 50 in Tier 1, 30 in Tier 2, 20 in Tier 3 and leave Tiers 4 to 10 at 0. The raw total is 100, so the best-ranked instrument takes 50% of capital, the second 30%, the third 20%, and the remaining seven are not held. At the next rebalance the ranking is recomputed: if the previous leader slips to third, its weight falls from 50% to 20%, and whichever instrument now ranks first takes the 50%. Nothing about the instruments changed the weights — only their positions in the sorted list did.