Risk Parity Portfolio
What is Risk Parity?
Risk Parity vs Markowitz
Markowitz: Maximizes return for a given risk level (focuses on capital allocation)
Risk Parity: Equalizes risk contribution from each asset (focuses on risk balance)
Key Difference: Markowitz might allocate 80% to low-risk bonds, while Risk Parity ensures each asset contributes equally to portfolio risk.
Use Case: Risk Parity is more stable during market stress and avoids over-concentration.
Step 1: Define Your Assets
How to use
Enter the annual volatility (%) and correlation for each asset. Risk Parity will calculate weights so each asset contributes equally to total portfolio risk.