Risk Parity Portfolio Construction Tool (Conceptual Simulator)
Portfolio Setup
E.g., 0.2 represents a low positive average correlation. Used for conceptual overall portfolio risk.
%
Leave blank if no specific target/leverage calculation desired.
Asset Class Inputs
Define your asset classes and their expected annual volatility. Target weights will be calculated based on inverse volatility.
Risk Parity Portfolio Construction & Analysis
Portfolio summary will appear here.
Target Asset Allocation & Risk Contribution
Allocation Chart
Note on Risk Contribution: The 'Risk Contribution ($ Vol x Weight)' column uses the simplified definition `Weight * Volatility`. Under the inverse volatility weighting scheme used, this value becomes equal for all assets before rounding, demonstrating the 'parity' concept in this simplified model. True risk contribution in a diversified portfolio also depends heavily on correlations, which are only used here for the overall portfolio volatility estimate.