你即將離開本站
How Do I Calculate the Standard Deviation of a Portfolio? The standard deviation of a portfolio is a proxy for its risk level. Unlike the straightforward weighted average calculation for portfolio expected return, portfolio standard deviation must take into account the correlations between each asset class. The implication is that adding uncorrelated assets to a portfolio can result in a higher expected return at the same time it lowers portfolio risk. As a result, the calculation can quickly become complex and cumbersome as more assets are added. For a 2-asset portfolio, the formula for its standard deviation is:σ = (w12σ12 + w22σ22 + 2w1w2Cov1,2)1/2where: wn is the portfolio weight of either asset, σn2 its variance, and Cov1,2, the covariance between the two assets. How Can I Find the Expected Return of a Portfolio? Some online brokers or certain financial advisors may be able to provide you with your portfolio's standard deviation at a glance, as it is automatically calculated via software in the background. To compute it by hand, you simply need to work out the weighted average of the expected returns of each individual holding.
