Two-asset portfolio volatility calculator

In short

The diversification benefit, live.

Interactive: two-asset portfolio volatilityEasy

The formula above, live. Slide the correlation and watch the diversification benefit appear — and vanish.

Weight in asset 1 % Vol of asset 1 % Vol of asset 2 % Correlation ρ

Portfolio volatility: —
Weighted-average vol: —
Diversification benefit: —
Reading: —

Defaults ≈ a 60/40 stock-bond portfolio. Set ρ to 0.6 — roughly 2022, when stocks and bonds fell together — and watch the benefit that six decades of allocators relied on shrink on contact.

The idea behind it

This calculator belongs to Diversification & Correlation, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.

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Not advice. This explains how something works; it is not a recommendation, and nothing here is tailored to you. You can lose everything you put in — with leveraged instruments, considerably more. StrikeAndYield is not a regulated firm and provides no financial services.

The same in full — six points, and why each one matters

No advice, no recommendation. Nothing on this page constitutes investment, financial, legal, tax or accounting advice, a personal recommendation, or an offer or solicitation to buy or sell any financial instrument.
Nothing here is tailored to you. This is written for a general audience. It does not consider your objectives, financial situation, knowledge, time horizon or tolerance for loss.
The examples are simplified. Worked examples use round numbers and leave out costs, spreads, taxes, collateral, settlement and market conventions that materially change real outcomes.
The models are teaching models. Formulas shown are standard textbook formulations. Institutions add calibration, live market data and credit, funding and capital adjustments — nothing here will reproduce a dealer’s quote or produce a valuation you can rely on.
These instruments carry risk. You can lose your entire investment. Leveraged instruments — futures, options, CFDs, perpetual futures and similar — can cost you considerably more than you originally deposited.
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