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.

Step 2: Calculate Risk Parity Allocation