Risk parity allocator
See how a two-asset portfolio would be weighted so each holding contributes equal risk, rather than equal money — the core mechanic of risk parity.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Asset A volatility
The annualised volatility (standard deviation) of the first asset.
- Asset B volatility
The annualised volatility of the second asset. The larger the gap between the two, the more lopsided the weights become.
- Read the weights
Each asset is weighted inversely to its volatility, so the calmer asset takes the larger share and both contribute equal risk.
Worked example: Equity and bonds
Asset A (equity) 20% volatility, Asset B (bonds) 5% volatility.
What to enter
- Asset A volatility
- 20%
- Asset B volatility
- 5%
What it shows you
- Weight A (equity)
- 20%
- Weight B (bonds)
- 80%
- Basis
- Equal risk contribution
- Vs 50/50 money
- Equity would be ~94% of risk
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Technical Analysis10 minRisk parity: balance the risk, not the moneyA 60/40 portfolio is not 60/40 in risk — equities dominate almost all of it. Risk parity sizes holdings so each contributes equal risk, and why that idea both helps and hides a catch.
- Technical Analysis10 minBollinger Bands and measuring volatilityBands that adapt to volatility, the squeeze that precedes big moves, and why ATR should decide your stop distance.
- Risk & Psychology11 minBorrowed money, and why it changes the arithmeticLeverage multiplies the outcome without improving your accuracy, and it hands somebody else the right to decide when you exit.
- Risk & Psychology10 minBuilding a portfolio that survivesHow many stocks, correlation, concentration versus diversification, and rebalancing without wrecking your returns.
- Market Basics11 minDirect stocks or mutual funds?Not a question of which is better, but of what each demands from you. An honest test, and the structure most people should actually use.