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Risk Parity Portfolio Calculator

Approximate inverse-volatility risk parity allocations across up to three assets.

Risk Parity Portfolio Calculator

Approximate inverse‑volatility allocations to equalize risk contribution across up to 3 assets.

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Single‑asset risk inputs.

Efficient Frontier

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Guide

Risk parity targets equal risk contribution; inverse‑volatility is a quick proxy.

For correlated assets, true risk parity needs the full covariance matrix.
Leverage is often used to lift expected return while keeping balanced risk.
Rebalance as volatilities shift to maintain parity.

Frequently Asked Questions

Risk parity concepts and caveats

What is risk parity?

An allocation approach that equalizes each asset's contribution to total portfolio risk, not capital.

Why inverse‑volatility?

If assets are uncorrelated, inverse‑vol weights approximate equal risk contribution.

Do correlations matter?

Yes. With correlations, compute marginal risk contributions using the covariance matrix and solve for equal contributions.

Is leverage required?

Often, yes, to lift expected return after sizing up low‑vol assets like bonds.

How stable are these allocations?

They change with volatility regimes; consider smoothing or bands to reduce turnover.

Can I cap weights?

Yes in practice; this simplified tool is unconstrained and sums to 1.

What is risk contribution?

It is weight × marginal contribution to risk; equal at the solution under the chosen risk model.

Does inverse‑volatility ignore returns?

Yes; it's risk‑only sizing. Pair with expected returns when targeting Sharpe or specific outcomes.

How frequently to rebalance?

Commonly monthly or quarterly, or when vol deviates beyond a threshold.

What about tail risk?

Volatility underweights tails; consider drawdown/CVaR based parity for tail‑aware sizing.

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Risk Parity Portfolio Calculator

Approximate inverse-volatility risk parity allocations across up to three assets.

How to use Risk Parity Portfolio Calculator

Step-by-step guide to using the Risk Parity Portfolio Calculator:

Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided

Frequently asked questions

How do I use the Risk Parity Portfolio Calculator?

Simply enter your values in the input fields and the calculator will automatically compute the results. The Risk Parity Portfolio Calculator is designed to be user-friendly and provide instant calculations.

Is the Risk Parity Portfolio Calculator free to use?

Yes, the Risk Parity Portfolio Calculator is completely free to use. No registration or payment is required.

Can I use this calculator on mobile devices?

Yes, the Risk Parity Portfolio Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.

Are the results from Risk Parity Portfolio Calculator accurate?

Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.