How to calculate portfolio risk and return in Excel / Analyzing stock returns / Episode 7

In this tutorial, we show how to calculate a portfolio's risk and return in Excel. We focus on a portfolio with three stocks, but the methods we use apply to portfolios of any size.

Visit the page below to download the Excel template used in this tutorial:
https://www.initialreturn.com/how-to-...

You might find the following lessons helpful as well:
https://www.initialreturn.com/portfol...
https://www.initialreturn.com/portfol...

Portfolio return with 3 assets = w1*R1 + w2*R2 + w3*R3
where wi is the investment weight for asset i and Ri is the return for asset i.

Portfolio risk with 3 assets: (w1*σ1)^2 + (w2*σ2)^2 + (w3*σ3)^2 + 2*w1*w2*σ12 + 2*w1*w3*σ13 + 2*w2*w3*σ23
where σi is the volatility of returns for asset i and σij is the covariance of returns between assets i and j.

The Excel functions we use for portfolio return calculations are AVERAGE and SUMPRODUCT.
And, those for portfolio risk calculations are VAR.S and COVARIANCE.S.

0:00 Intro
0:54 Investment weights
2:08 Portfolio return
4:08 Portfolio risk
10:29 Faster method
14:00 Outro

Enjoying our content?

Click the link below to subscribe to our channel:
   / @initialreturn  

You can also follow us on X (Twitter):
https://x.com/initial_return

And, visit our website for free courses, tutorials, and more:
https://www.initialreturn.com/

#exceltutorial #portfoliomanagement #investing