Quadrix is a proprietary stock-rating system that evaluates individual equities by combining more than 90 underlying variables into a single composite score. Developed by Rich Moroney of Horizon Investment Services and published by Horizon Publishing Company since about 2000, Quadrix is intended to help investors narrow a large stock universe to a smaller set of candidates for further research and selection.[1][2]
Key takeaways
– Quadrix produces a single, weighted score for each stock based on over 90 variables grouped into seven major categories: momentum, quality, value, financial strength, earnings estimates (forecasted earnings), performance, and reversion.[1][2]
– The system covers a broad universe (reported as over 4,000 stocks) and is used as a screening tool and research starting point rather than a full portfolio construction engine.[1]
– Quadrix is maintained and used by Horizon for its publications and is available to subscribers of Horizon’s newsletters and services.[2]
– Quadrix is not a risk-based portfolio builder and does not implement Modern Portfolio Theory (MPT) allocations—investors must still apply risk management and asset-allocation rules themselves.[1][2]
How Quadrix works (high level)
– Variable categories: Quadrix aggregates many measurements across seven categories:
• Momentum (price trends and relative strength)
• Quality (profitability, margins, efficiency metrics)
• Value (valuation ratios relative to peers or history)
• Financial strength (balance-sheet measures such as leverage and liquidity)
• Forecasted earnings (analyst revisions and estimate trends)
• Performance (recent returns vs. benchmarks)
• Reversion (signals that a stock may mean-revert or continue trends)[1][2]
• Scoring: Each underlying variable is scored, category scores are formed, and an overall composite is produced via a weighted average across variables. The weights reflect the system’s design (a proprietary mix chosen by its developers).[1][2]
• Coverage and intent: Quadrix applies these measurements across a large universe (reported as over 4,000 stocks) to pare the opportunity set. It’s designed as a “first screen”—to identify candidates worthy of deeper analysis—rather than a turnkey portfolio allocator.[1]
Examples and uses of Quadrix
– Screening: Use Quadrix to reduce the investable universe to top-ranked stocks (for example, the top decile or top 50–100 names) before applying fundamental or technical analysis.
– Idea generation: Subscribers and Horizon analysts use Quadrix to create watchlists and identify high-scoring names across sectors and industries.
– Industry/sector health: Because it scores many names, Quadrix can be summarized at the industry-group level to track where strength or weakness is concentrated.
– Input to research: Professional investors can use Quadrix scores as one input among multiple (quant metrics, fundamental analysis, macro view) to form conviction.[1][2]
Practical steps for investors who want to use Quadrix
1. Access Quadrix
• Subscribe to a Horizon newsletter or platform that provides Quadrix scores, or access the system through any vendor that distributes the scores.[2]
2. Define your universe and objectives
• Decide whether you want U.S. large caps, small caps, dividend payers, growth stocks, etc., and whether you seek short-term trading candidates or longer-term holdings. Quadrix covers a broad universe, so narrow it first by market cap, sector, or liquidity if desired.[1]
3. Filter by overall Quadrix score
• Screen for the top X% (for example, top 10% or top 50 names) to create an initial candidate list. Adjust the cutoff to match how many names you want to research further.
4. Inspect category and sub-scores
• Don’t rely only on the composite. Check individual category scores (momentum, value, earnings estimates, quality, financial strength, reversion, performance) to understand why a stock ranked highly and whether the driver fits your investment style.
5. Combine Quadrix with additional screens
• Add fundamental filters you care about (P/E, ROE, debt/equity, free cash flow), analyst coverage/estimates, and technical levels. Use Quadrix to prioritize, not to replace, deeper due diligence.
6. Qualitative review
• Conduct company-level research: business model, competitive position, management quality, recent news, and catalysts. Use Quadrix as a quantitative flag, not a final decision.
7. Position sizing and portfolio construction
• Determine position sizes based on risk tolerance, diversification needs, and total portfolio exposure. Because Quadrix does not provide MPT-based weighting, incorporate your own asset-allocation and risk-management rules (e.g., max position size, sector limits).
8. Establish entry/exit and monitoring rules
• Define buy triggers (e.g., score threshold + technical confirmation), stop-loss or trailing rules, and rebalancing cadence (monthly, quarterly). Monitor earnings revisions and category-score shifts.
9. Backtest or paper-trade first
• If possible, backtest the specific Quadrix-based rules you plan to use or start with paper trading to understand expected turnover, drawdowns, and realized performance before allocating significant capital.
10. Review and adapt
• Periodically review how Quadrix-driven choices have performed and whether the weighting of categories or your complementary filters need adjustment.
Example interpretation scenarios
– High overall score driven by momentum and earnings revisions but low value score: likely a strong-growth/short-term momentum candidate; check valuation risk if you plan to hold long term.
– High value and financial-strength scores but low momentum: possibly an undervalued, fundamentally solid stock that may take time to re-rate—suitable for longer-term value investors.
– Mixed scores across categories: use the breakdown to decide if the stock fits your time horizon and risk tolerance.
Limitations and considerations
– Proprietary weights and variables: Quadrix is a black-box for many users—exact variable definitions and weightings are proprietary, so you must interpret scores without full transparency.[1][2]
– Not a complete portfolio solution: Quadrix helps screen stocks but does not allocate across asset classes, adjust for portfolio-level risk, or replace comprehensive risk-management frameworks.[1]
– Historical, not predictive, certainty: Like all quantitative ratings, Quadrix is based on historical and current data and cannot guarantee future returns. Momentum-driven ratings may underperform in reversals.
– Over-reliance risk: Don’t substitute a single quantitative score for full fundamental and situational analysis (company-specific events, macro shocks, industry changes).
How to access Quadrix
– Quadrix scores are distributed by Horizon Publishing and are made available to subscribers of Horizon’s newsletters and research services.[2] Check Horizon’s site or product offerings for subscription access or third-party platforms that license Quadrix data.
Conclusion
Quadrix is a well-established, multi-factor stock rating system intended to be a first step in the investment selection process. It condenses more than 90 variables across seven categories into a single score to help investors identify promising stocks from a broad universe. Used properly—as a quantitative screen that is followed by qualitative and portfolio-level analysis—Quadrix can speed idea generation and focus research, but investors should be aware of its proprietary nature and limit reliance on a single metric.
Sources
1) Investopedia (Ryan Oakley). “Quadrix.”
2) Horizon Investment Services. “Quadrix Stock‑Rating System: The Cornerstone of Our Research.” (Horizon Publishing materials)
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.