This tool helps you explore how different asset weights and correlations impact overall portfolio risk and return.
The "Simplified Risk Proxy" (`Weight × Volatility`) shows each asset's standalone risk scaled by its weight. It's a basic illustration. True risk parity aims to equalize each asset's actual contribution to *overall portfolio volatility*, considering correlations, which is more complex.
Adjust weights and assumptions to see how the portfolio's risk/return profile and the "Simplified Risk Proxy" values change. You can try to make these proxy values more similar to explore what a more 'risk-balanced' allocation might look like under this simplified view.
This tool does NOT optimize weights for risk parity automatically. It's for educational exploration. Real risk parity strategies use sophisticated mathematical models and often employ leverage (which is not directly modeled here, though you could input characteristics of a leveraged asset class).
All inputs (returns, volatilities) are your estimates or based on historical data and are not guarantees of future performance.
