Analysis Methodology

Detailed documentation of scoring algorithms, thresholds, and calculation methods. Version 1.1.0. Last updated: 2026-07-12

Version Information

Current analysis engine version and changelog

Current Version

1.1.0

Version History

1.1.0

2026-07-12

Canonical MapleAudit scorecard: Concentration 28%, Diversification 24%, CRA patterns 18%, Dividends 16%, Exposure 14%
Soft-caps to limit double-counting between concentration↔diversification (multi-name only) and FX↔CRA
Hard caps so extreme single-name concentration cannot leave diversification looking healthy
Expanded Canadian cluster detection: banks, pipelines, REITs, energy, telecom, utilities
Portfolio-level assessment line derived from overall score and weakest category
Web report and PDF share one CanonicalAuditResult (PDF prefers client-held result)
Legacy CSV/upload and standalone analyze API retired
Deep analysis limited to modules surfaced in report/PDF

1.0.0

2024-01-01

Initial release of analysis engine
CRA pattern indicator scoring methodology established
Concentration risk thresholds: 20% single holding, 40% sector
Diversification score using HHI (Herfindahl-Hirschman Index)
Dividend analysis with yield trap detection (>8% yield threshold)
FX exposure analysis with TFSA foreign withholding tax detection (25% threshold)
Canadian-only validation guardrails (TFSA/RRSP/Taxable, TSX tickers, CAD currency)

Overall MapleAudit scorecard

Deterministic category health scores → overall 0–100. Implemented in lib/mapleaudit/scoring.ts. Not AI-scored.

Concentration

Largest position and top-3 weight vs ~20% / heavy top-3 thresholds

28%

Diversification

HHI effective holdings and multi-name cluster overlap

24%

CRA patterns

Inverted pattern score (more flags → lower category health)

18%

Dividends

Yield profile and high-yield observation flags

16%

Exposure

CAD vs foreign mix and TFSA foreign-withholding context

14%

Soft-caps reduce double-counting only for multi-name portfolios where concentration and HHI already describe the same oversized-weight problem. Extreme single-name books (largest ≥50% or <1.5 effective holdings) are hard-capped so diversification cannot appear healthy while concentration is severe. FX withholding and overlapping CRA flags are soft-capped similarly. Higher overall score means healthier structure under these rules — not investment advice.

CRA Pattern Indicator Scoring

CRA Pattern Indicator scoring identifies patterns that have been observed in some cases CRA examined. This is NOT a compliance score or risk assessment.

Version

1.1.0

Scoring Weights

high Severity

High severity patterns contribute 30 points each to pattern indicator score (0-100 scale).

30 points

medium Severity

Medium severity patterns contribute 15 points each to pattern indicator score (0-100 scale).

15 points

low Severity

Low severity patterns contribute 5 points each to pattern indicator score (0-100 scale).

5 points

Thresholds

tfsa Concentration

Informational threshold for TFSA allocation. Portfolios with >50% in TFSA may warrant careful contribution limit tracking.

50%

large Position Count

Arbitrary threshold used as proxy indicator for potential trading frequency. Holding many positions is legal and common.

20 holdings

foreign Withholding

Informational threshold for foreign holdings in TFSA. Foreign dividends are subject to 15% unrecoverable withholding tax.

25% of TFSA value

Important: This scoring system reflects the number and severity of patterns observed, NOT a compliance score, risk assessment, or prediction of CRA action. The scoring methodology is an arbitrary weighting system for pattern recognition only and does NOT reflect actual CRA assessment criteria (which are not public).

Concentration Risk Analysis

Mathematical concentration metrics identify single-stock and sector-level concentration. This is NOT a legal or tax concern, but a portfolio risk metric.

Version

1.1.0

Thresholds

single Holding

General portfolio management guideline. Single positions >20% represent high concentration and increased volatility risk.

20%

sector Concentration

Sector concentration threshold. Portfolios with >40% in one sector have reduced diversification benefits.

40%

Note: Concentration metrics are mathematical calculations only, not legal or tax concerns. They identify portfolio risk characteristics, not compliance issues.

Diversification Score

Diversification score measures effective portfolio diversification using HHI. Lower HHI indicates better diversification.

Version

1.1.0

Algorithm

Herfindahl-Hirschman Index (HHI) with normalization to 0-100 scale

Formula

1. Calculate portfolio weights: w_i = marketValue_i / Σ(marketValue)

2. Calculate HHI: HHI = Σ(w_i²) × 10,000

3. Calculate Effective Holdings: EH = 1 / (HHI / 10,000)

4. Calculate Score: Score = ((10,000 - HHI) / 10,000) × 100

Thresholds

low Diversification

Scores below 50 indicate poor diversification (high concentration). Scores above 50 indicate better diversification (lower concentration).

<50 score

Dividend Analysis

Dividend analysis identifies high-yield patterns that may correlate with dividend sustainability concerns. High yield alone is not problematic.

Version

1.1.0

Thresholds

yield Trap

Yield trap threshold. Dividends exceeding 8% historically correlate with sustainability concerns, though many quality companies pay high dividends.

8% dividend yield

Foreign Exchange Exposure

Foreign exchange exposure analysis identifies CAD/USD allocations and TFSA foreign withholding tax implications.

Version

1.1.0

Thresholds

tfsa Foreign Withholding

Informational threshold for TFSA foreign holdings. Foreign dividends in TFSA are subject to 15% unrecoverable withholding tax.

10% of total portfolio

Reproducibility

How web and PDF stay consistent

MapleDiv holdings are mapped to a normalized audit input, then run through analyzePortfolio and buildCanonicalAuditResult. The interactive report and PDF consume the same CanonicalAuditResult. PDF download prefers the result already shown in the browser so figures match.

Extended risk metrics (volatility, drawdown, Sharpe, etc.) are included only when sufficient market history exists. Missing history is omitted — never shown as zero.

Important Disclaimers

• All calculations are mathematical pattern indicators only, not compliance assessments or risk predictions.
• Thresholds are informational guidelines, not legal or regulatory requirements. Many legitimate portfolios may exceed these thresholds.
• Scoring methodologies are arbitrary weighting systems for pattern recognition, not based on actual CRA assessment criteria (which are not public).
• This methodology documentation is provided for transparency and educational purposes only. Consult qualified professionals for personalized guidance.