The idea behind the equity duration approach is to identify the level of risk embeded into analyst estimated for sales and margins (EBITDA) while using price to earnings duration model. As equity duration measures the time to get back the initial investment, thus a strict relationship between sales and maring variability and time to get back the investment is the key topic while measuring potential securities drawdowns and expected returns. Sales growth rate as well margins (EBITDA) for each company and sector (excluding financial securities such as stocks in sectors like banks,insurers,REITs) must be analyzed the extract the relationship between margin variability, sales growth and premium/discount applied by market participants for historical data (15 years).
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