Macro Sensitivity

The Macro Sensitivity cluster captures how a company's financials and valuation are affected by broad macroeconomic forces — things like central bank rate decisions, currency moves, and commodity price swings. A high score on any dimension in this cluster means the company is more exposed to that risk.

Interest Rate Sensitivity (Duration)

High-growth, high-multiple stocks behave like long-duration bonds: their value is heavily weighted toward earnings far in the future, which are discounted more steeply when rates rise. This dimension proxies that exposure using the P/E ratio. A company trading at 60x earnings is far more sensitive to a 50bps rate hike than one trading at 12x.

Higher score = worse when rates are rising.

Interest Rate Sensitivity (Debt)

Separate from the valuation channel, companies with large amounts of floating-rate or short-maturity debt face a direct hit to their cost of capital when rates move. This dimension is proxied by the share of short-term debt within total debt. A company rolling over debt every year is immediately exposed to the current rate environment.

Higher score = worse when rates are rising.

Dollar Sensitivity

Companies that earn a large portion of revenue outside the US are exposed to the US dollar. When the dollar strengthens, overseas earnings translate back to fewer dollars, compressing reported results. US-headquartered companies with predominantly domestic revenue score low; multinationals and companies listed outside the US score higher.

Higher score = worse when the dollar is strengthening.

Inflation Sensitivity

This dimension measures how much of a company's revenue is consumed by input costs — the inverse of gross margin. A manufacturer with a 30% gross margin has 70% of revenue going to cost of goods sold, making it very sensitive to input price inflation. A software company with an 80% gross margin has much more insulation.

Higher score = worse during inflationary periods.

Credit Spread Sensitivity

Companies with high leverage relative to their earnings (measured as net debt to EBITDA) are most exposed when credit spreads widen. Wider spreads raise their refinancing costs and can trigger covenant concerns. This dimension overlaps with debt burden in the Financial Structure cluster but focuses on the market price of credit risk rather than balance sheet structure.

Higher score = worse when credit conditions tighten.

Commodity Input Exposure

Industries that rely heavily on raw materials — steel, aluminium, crude oil, agricultural inputs — see their cost base fluctuate directly with commodity prices. This dimension is proxied by sector: basic materials and energy score near 1.0; software and financial services score near 0.2.

Higher score = worse when commodity prices spike.

Energy Cost Intensity

Energy is a significant operating cost for airlines, chemical manufacturers, cement producers, shipping companies, and heavy industrials. This dimension identifies those industries specifically. For most technology and services companies, energy is a minor overhead and scores low.

Higher score = worse when energy prices rise.