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Bringing Risk and Financial Data into Focus through Visualization
Bringing Risk and Financial Data into Focus through Visualization
About Us
Nick HeitzmanSenior Analyst
Kimble McCrawSenior Analyst
Agenda
• Why does Data Visualization matter?
• Chart Types for Risk and Finance
• Design Best Practices
• Misleading Charts, or How to Lie with Data
• Data Story Telling
Why does Data Visualization matter?
I II III IV
x y x y x y x y
10.0 8.04 10.0 9.14 10.0 7.46 8.0 6.58
8.0 6.95 8.0 8.14 8.0 6.77 8.0 5.76
13.0 7.58 13.0 8.74 13.0 12.74 8.0 7.71
9.0 8.81 9.0 8.77 9.0 7.11 8.0 8.84
11.0 8.33 11.0 9.26 11.0 7.81 8.0 8.47
14.0 9.96 14.0 8.10 14.0 8.84 8.0 7.04
6.0 7.24 6.0 6.13 6.0 6.08 8.0 5.25
4.0 4.26 4.0 3.10 4.0 5.39 19.0 12.50
12.0 10.84 12.0 9.13 12.0 8.15 8.0 5.56
7.0 4.82 7.0 7.26 7.0 6.42 8.0 7.91
5.0 5.68 5.0 4.74 5.0 5.73 8.0 6.89
Mean: 7.5
Variance: 4.12
Correlation: 0.816
Regression: y = 3 + .5x
Anscombe’s Quartet
Chart Types for Risk and Finance
Common Chart Types
Scatter Plot
0.3%
0.4%
0.5%
-2 0 2
Interest Rate Change
De
fau
lt R
ate
PD Current ARMs
Scatter Plot
Column Chart
Column Chart
Source: Capital One
Capital One Net Income($ in millions)
Source: The Economist
Bar Chart
Stacked Bar Chart
Source: The Economist
Actual
Predicted
0
25
50
75
100
125
0
25
50
75
100
125
-50% 0% 50% 100% 150%
Co
un
t
Histogram
Box-and-Whisker
Line Graph
Source: U.S. Treasury, Office of Financial Research
0%
10%
20%
30%
40%
50%
2006 2008 2010 2012 2014
Ave
rag
e
Actual Model 1 Model 2
Actual vs Predicted Performance
Line Graph
Candlestick Chart
Area Graph
Area Chart
Source: U.S. Treasury, Office of Financial Research
Source: Gresham’s Law
Area Chart
Area Chart
Source: U.S. Treasury, Office of Financial Research
Surface Graph
Pie Chart
Source: Forbes
Rarer, but Interesting Chart Types
Geomap
Heatmap
Tree Map
Network Map
Network Map
Design Best Practices
Chart Elements to Consider:
Line Markers
Colors
Gridlines & Tick Marks
Axes Labels
Legends
Titles
Data Labels
Line Markers
Line Markers
Colors
Colors
Gridlines and Tick Marks
Gridlines and Tick Marks
Gridlines and Tick Marks
Axes Labels
Axes Labels
Legends
Legends
Titles
Titles
Original Chart
Titles
Other Design Best Practices to Consider
Dual Axes
Dual Axes
Poll: Which slice is larger?
1) A2) BBB
Source: FINRA, 2005 Factbook
Poll: Which slice is larger?
1) A – 33%2) BBB – 28%
Chart Borders
Chart Borders
Data Labels
Data Labels
Misleading with Visualizations
Truncated Axes
490
495
500
505
510
515
520
2014 2015
Sales
Truncated Axes
0
100
200
300
400
500
600
2014 2015
Sales
Truncated Axes
Truncated Axes
Cumulative Results
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014
Cumulative Earnings
Cumulative Results
0
20
40
60
80
100
120
2010 2011 2012 2013 2014
Earnings
0
20
40
60
80
100
120
140
160
180
2010 2011 2012 2013 2014 2015
Revenue
Unequal Intervals
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015
Unequal Intervals
13
14
15
16
17
-20
-10
0
10
20
2007 2008 2009 2010 2011 2012 2013 2014 2015
Northwinds Quarterly Sales
YoY Sales Growth (Left Axis) Gross Margin (Right Axis)
Axes Alignment
Implied Correlation
Calculated Correlation = 0.9524!
3-D
3-D
Data Story Telling
Poll: Which servicer had the highest default rate?
A)Fifth Third BankB) GMACC) PNCD)Taylor, Bean & WhitakerE) US Bank
Why was this question hard to answer?
Alphabetical Sorting makes this question difficult to answer
What are the four loan servicers with the highest default rate?
What are the four loan servicers with the highest default rate?
What are the four loan servicers with the highest default rate?
Lengthy x-axis labels take up too much space
GMAC had the highest default rate
Fifth Third had the lowest default rate
Final Thoughts
I II III IV
x y x y x y x y
10.0 8.04 10.0 9.14 10.0 7.46 8.0 6.58
8.0 6.95 8.0 8.14 8.0 6.77 8.0 5.76
13.0 7.58 13.0 8.74 13.0 12.74 8.0 7.71
9.0 8.81 9.0 8.77 9.0 7.11 8.0 8.84
11.0 8.33 11.0 9.26 11.0 7.81 8.0 8.47
14.0 9.96 14.0 8.10 14.0 8.84 8.0 7.04
6.0 7.24 6.0 6.13 6.0 6.08 8.0 5.25
4.0 4.26 4.0 3.10 4.0 5.39 19.0 12.50
12.0 10.84 12.0 9.13 12.0 8.15 8.0 5.56
7.0 4.82 7.0 7.26 7.0 6.42 8.0 7.91
5.0 5.68 5.0 4.74 5.0 5.73 8.0 6.89
Column Chart
0%
10%
20%
30%
40%
50%
2006 2008 2010 2012 2014
Ave
rag
e
Actual Model 1 Model 2
Actual vs Predicted Performance
Line Graph
Area Chart
Source: U.S. Treasury, Office of Financial Research
490
495
500
505
510
515
520
2014 2015
Sales
Source: FINRA, 2005 Factbook
Dashboarding, Business Intelligence, and Interactivity Webinar January 26, 2016 at noon
Contact Info: [email protected]@ficonsulting.com
