Portfolio Risk & Return Calculator

Period 1 Year 3 Years 5 Years Max Available

Stock

Weight

Fill in at least 2 rows. Weights don't need to add up to 100 - we'll normalize them automatically.

Calculate Risk & Return

How This Is Calculated

Expected portfolio return is the weighted average of each stock's own historical annualized return:

R_p = ∑ w_i × R_i

Portfolio volatility is not a simple weighted average - it accounts for how the stocks move together (their correlation), which is the mathematical basis of diversification (this is the same Markowitz Modern Portfolio Theory framework taught in portfolio management courses):

σ_p² = ∑_i ∑_j w_i w_j σ_i σ_j ρ_ij

Worked example: Two stocks, each with 30% volatility, weighted 50/50. If they were perfectly correlated (ρ=1), the portfolio volatility would also be 30% - no benefit. If they're uncorrelated (ρ=0), the portfolio volatility drops to about 21.2% - lower than either stock alone, purely from diversification.

Frequently Asked Questions

Why is portfolio risk lower than the average of the individual stocks' risk?

This is diversification at work. When stocks don't move in perfect lockstep (correlation below 1.0), combining them smooths out some of the ups and downs - some losses in one stock get offset by gains in another. The less correlated your stocks are, the bigger this effect.

What does the correlation matrix show?

Each cell shows how closely two stocks' daily price movements track each other, from -1 (perfectly opposite) to +1 (move exactly together). Values near 0 mean the two stocks move mostly independently - combining them gives the biggest diversification benefit. Values near +1 mean they tend to move together, so combining them diversifies less than you might expect.

How is "expected portfolio return" calculated?

It's simply the weighted average of each stock's own historical annualized return. This is a simplification (it assumes the future looks like the past) - it does not predict future returns.

Why do my weights need to add up to 100%?

Weights represent what fraction of your total money goes into each stock. We automatically normalize whatever numbers you enter so they add up to 100%, so you can enter ratios like 1, 1, 2 instead of exact percentages if you prefer.

Is this dividend-adjusted?

No - like our other tools, this uses price-only historical data (no dividend/split adjustment).