Portfolio Optimization Calculator

Balance risk and reward with flexible portfolio inputs. See frontier points and allocation changes instantly. Export results for planning, presentations, audits, and ongoing decisions.

Calculator Inputs

Total Investment

Risk Free Rate (%)

Target Return (%)

Weight Step Size (%)

Minimum Weight per Asset (%)

Maximum Weight per Asset (%)

Optimization Objective

Asset 1 Name

Asset 2 Name

Asset 3 Name

Asset 1 Expected Return (%)

Asset 2 Expected Return (%)

Asset 3 Expected Return (%)

Asset 1 Volatility (%)

Asset 2 Volatility (%)

Asset 3 Volatility (%)

Correlation 1-2

Correlation 1-3

Correlation 2-3

Portfolio Frontier Graph

The chart plots feasible portfolios by volatility and expected return. The upper boundary represents the efficient frontier. The selected point marks the optimized result.

Example Data Table

Asset	Expected Return (%)	Volatility (%)
Equity Fund	12.00	18.00
Bond Fund	6.00	7.00
REIT	9.00	14.00

Pair	Correlation
Equity Fund and Bond Fund	0.25
Equity Fund and REIT	0.40
Bond Fund and REIT	0.15

Formula Used

Expected portfolio return: Rp = Σ(wi × ri)

Covariance: Covij = Corrij × σi × σj

Portfolio variance: σp² = ΣΣ(wi × wj × Covij)

Portfolio volatility: σp = √σp²

Sharpe ratio: (Rp − Rf) ÷ σp

The calculator checks feasible weight combinations that sum to 100%. It then selects the best portfolio using your chosen objective.

How to Use This Calculator

Enter your investment amount, risk free rate, and target return.
Choose the optimization objective that matches your goal.
Set the step size for the search grid.
Define minimum and maximum weight limits for each asset.
Enter three asset names, expected returns, volatilities, and pairwise correlations.
Click Optimize Portfolio to generate the best feasible mix.
Review the allocation table, covariance matrix, and frontier graph.
Use the CSV and PDF buttons to save the output.

FAQs

1. What does this calculator optimize?

It searches feasible weight combinations for three assets and returns the portfolio that best fits your selected objective, including maximum Sharpe ratio, minimum variance, or target return matching.

2. Why are correlations important?

Correlations describe how assets move together. Lower or negative relationships can reduce portfolio variance, which improves diversification even when some assets are individually volatile.

3. What does the step size change?

Step size controls the search granularity. Smaller steps check more combinations and can improve precision, but they also increase calculation time and the number of feasible portfolios tested.

4. Can I allow short positions?

Yes. Enter a negative minimum weight and an appropriate maximum weight. The calculator will then test portfolios that include short exposure while still enforcing the total weight constraint.

5. Why might no portfolio hit my target return?

If the target is too high for the asset inputs and weight limits, no feasible mix can achieve it. The calculator then shows the closest available alternative.

6. What is the efficient frontier?

The efficient frontier is the upper set of portfolios that deliver the highest expected return for each volatility level among all feasible combinations.

7. Does the calculator use historical data automatically?

No. You must provide expected returns, volatilities, and correlations. This keeps the tool flexible for scenario planning, forecasting, and custom assumptions.

8. What does the Sharpe ratio tell me?

The Sharpe ratio measures excess return per unit of risk. Higher values usually indicate a more efficient risk adjusted portfolio when assumptions are comparable.