Risk-Return Calculator
Analyze the tradeoff between risk and potential returns for your investments. Calculate expected returns, volatility, Sharpe ratio, and optimize your portfolio based on your risk tolerance.
Step 1: Investment Parameters
Understanding Risk Tolerance
Risk tolerance measures how much volatility you can withstand in your investments. Lower numbers indicate conservative investors, while higher numbers indicate willingness to accept more risk for potentially higher returns.
Step 2: Portfolio & Market Assumptions
About Expected Returns
Expected returns vary by asset class and market conditions. Historically, stocks have averaged 7-10% annually, while bonds have averaged 3-5%. These are long-term averages and past performance doesn’t guarantee future results.
Risk-Return Analysis Results
Your Risk-Return Profile
Portfolio Type Comparison
| Portfolio Type | Expected Return | Risk (Volatility) | Sharpe Ratio |
|---|
Risk-Return Breakdown
Risk-Return Calculation Formula
Expected Value = Initial Investment × (1 + Expected Annual Return)Time Horizon
The Sharpe Ratio measures risk-adjusted return: (Portfolio Return – Risk-Free Rate) ÷ Portfolio Standard Deviation. Higher Sharpe ratios indicate better risk-adjusted performance.
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