All calculators / Returns and risk
Two-asset portfolio risk and returnAnalyst
How combining two assets changes risk.
What you’ll enter
- Weight in asset A
- Expected return A
- Expected return B
- Volatility A
- Volatility B
- Correlation between A and B
Included with Analyst
Unlock this calculator and all 37 others, from $2 a month.
See plansAlready subscribed? Activate your key
Or try a free one: Future value, Loan and mortgage payment, Compound annual growth rate (CAGR)
The formula
σp = √[w²σA² + (1−w)²σB² + 2w(1−w)ρσAσB]
When correlation is below 1, portfolio volatility is lower than the weighted average of the two, which is the benefit of diversification.