Portfolio Optimization Calculator

Portfolio Optimization Calculator — Calculate Optimal Asset Allocation

Calculate the optimal asset allocation for your investment portfolio using Modern Portfolio Theory (MPT). Determine the efficient frontier based on your risk tolerance, investment horizon, and financial goals.

Step 1: Portfolio Specifications

Portfolio Value ($)

Investment Horizon (years)

Annual Contribution ($)

Modern Portfolio Theory (MPT)

MPT is an investment theory that shows how risk-averse investors can construct portfolios to maximize expected return for a given level of market risk.

Step 2: Risk & Return Preferences

Risk Tolerance

Expected Annual Return (%)

Maximum Acceptable Drawdown (%)

25%

Show asset class comparison table

Show allocation visualization

About Risk-Return Tradeoff

Higher potential returns generally come with higher risk. Your risk tolerance should align with your investment goals, time horizon, and financial situation.

Portfolio Optimization Results

Summary

Asset Classes

Efficient Frontier

Optimal Portfolio Allocation

65% Stocks

For moderate risk tolerance with 15-year horizon

Expected Return

8.2%

Portfolio Risk

14.5%

Sharpe Ratio

0.57

Rebalance Frequency

Quarterly

Asset Class Comparison

Asset Class	Expected Return	Risk (Std Dev)	Allocation %

Efficient Frontier Analysis

Portfolio Optimization Formula

Maximize: Expected Return – (Risk Aversion × Portfolio Variance)

The efficient frontier represents optimal portfolios offering the highest expected return for a defined level of risk, based on historical correlations between asset classes.

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