For informational purposes only. This tool provides estimates based on your inputs and may differ from actual outcomes. It does not constitute financial advice. Please consult a qualified professional before making financial decisions. Terms
Build your portfolio, analyze risk and diversification, and get actionable rebalancing recommendations.
Moderate
Below Avg
Total
$75K
Your portfolio plotted against individual asset classes and the efficient frontier
Moderate
Lower is better. Under 25% = well-diversified.
Avg weighted correlation: 0.35. Lower correlation = better diversification benefit.
Your portfolio is 67% US equities. Consider adding international exposure to reduce single-market concentration risk.
You have 13% in developed international but no emerging markets. Adding 5-10% EM can capture higher growth potential.
Adding 5-10% real estate funds (REITs) can improve diversification and provide inflation protection with moderate correlation to stocks.
Expected portfolio growth with ±1 standard deviation bands
10Y Value
$175K
20Y Value
$410K
1,000 simulated scenarios showing the probability distribution of portfolio outcomes over 20 years
Monte Carlo Simulation
How your current allocation would have performed during major market crashes
2008 Financial Crisis
-??%
-$??,???
COVID Crash (2020)
-??%
-$??,???
2022 Bear Market
-??%
-$??,???
Historical Stress Test
Compare your portfolio against recommended allocations for your age group
20s
90%
-10%
30s
80%
0%
40s
65%
+15%
50s
50%
+30%
60s+
35%
+45%
20s
5%
+15%
30s
10%
+10%
40s
25%
-5%
50s
35%
-15%
60s+
45%
-25%
20s
0%
0%
30s
5%
-5%
40s
5%
-5%
50s
10%
-10%
60s+
10%
-10%
20s
5%
-5%
30s
5%
-5%
40s
5%
-5%
50s
5%
-5%
60s+
10%
-10%
Rule of thumb: your stock allocation should be roughly 110 minus your age.
Get Monte Carlo simulations, historical stress tests, optimal portfolio suggestions, and scenario comparison with PRO.
Modern Portfolio Theory (MPT), developed by Harry Markowitz, demonstrates that an investor can construct a portfolio of multiple assets that maximizes expected return for a given level of risk. The key insight is that portfolio risk depends not only on individual asset volatilities, but critically on the correlations between assets.
By combining assets with low or negative correlations, investors can achieve better risk-adjusted returns than any single asset. This is the mathematical foundation behind diversification, often called the only "free lunch" in investing.
A common rule of thumb is to subtract your age from 110 to determine your stock allocation. A 30-year-old might hold 80% stocks and 20% bonds, gradually shifting toward bonds as retirement approaches. However, factors like risk tolerance, income stability, and financial goals should personalize this guideline.
Target-date funds automate this "glide path" approach, gradually becoming more conservative over time. Our preset allocations reflect common strategies at different risk tolerance levels.
The Sharpe ratio measures risk-adjusted return by comparing excess return (over the risk-free rate) to portfolio volatility. A ratio above 1.0 is considered good, above 2.0 is excellent, and below 0.5 suggests the risk may not be adequately compensated. It helps compare portfolios on an apples-to-apples basis regardless of total risk.
Portfolio drift occurs naturally as different assets grow at different rates. Regular rebalancing (selling outperformers and buying underperformers) maintains your target allocation and risk level. Most advisors recommend rebalancing annually, or when any allocation drifts more than 5% from its target.
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Analyze your investment portfolio with risk-return optimization, correlation matrix, efficient frontier, Monte Carlo simulation, and historical stress tests. Free asset allocation tool.
The Sharpe ratio measures risk-adjusted return: (portfolio return - risk-free rate) / standard deviation. A higher Sharpe ratio means better return per unit of risk. Above 1.0 is good, above 2.0 is excellent. It helps compare portfolios that have different risk levels on an equal footing.
The efficient frontier is a curve showing the optimal portfolios that offer the highest expected return for each level of risk. Portfolios below this line are suboptimal: you could get more return for the same risk or less risk for the same return. The analyzer plots your portfolio against this frontier to show improvement opportunities.
Correlation measures how assets move together (-1 to +1). Low or negative correlation between holdings reduces overall portfolio volatility. For example, bonds often move opposite to stocks during crises. The correlation matrix helps identify true diversification vs. holding multiple assets that all move together.
Monte Carlo simulation runs thousands of random market scenarios based on historical return distributions to project a range of possible outcomes. It shows you the probability of reaching your goals and the potential worst-case, median, and best-case portfolio values. This is far more realistic than a single average return projection.
The Age-Based Allocation Benchmark compares your actual stock/bond/alternatives/cash split against recommended allocations for five age groups (20s through 60s+). A common rule of thumb is "110 minus your age" for stock allocation. Younger investors can hold 80-90% stocks, while near-retirement investors should shift toward 35-50% stocks with more bonds for stability.
