USC Marshall Center for Global Innovation: “Innovation is widely acknowledged as an important but difficult construct to measure. Currently indices of the most innovative corporations rely on soft data such as polls or subjective judgments of raters. This page describes an index for ranking the most innovative corporations that is based on hard market data. The index uses five metrics of innovation. The unique feature of these metrics is that they are based on market data that is publicly available. Various portfolios of most innovative corporations (top 20, 30, or 40) based on this index, significantly and substantially outperform the S&P 500 in up markets and do almost as well in down markets, both concurrently and one year ahead. Furthermore, the risk associated with such portfolios is less than 1 in two years and equal to 1 in one year. Thus, these returns occur without excessive risk. Investing $10,000 each year in the top 20 portfolio yields 46% more than doing the same in the S&P 500 for concurrent years and 23% more for one-year-ahead performance. These results lend some credibility to the importance of innovation, the value of the metric, and the need for monitoring and measuring corporate performance on innovation.”