Question

how to calculate portfolio

Answer 1

Let’s say the returns from the two assets in the portfolio are R1 and R2. Also, assume the weights of the two assets in the portfolio are w1 and w2. Note that the sum of the weights of the assets in the portfolio should be 1. The returns from the portfolio will simply be the weighted average of the returns from the two assets, as shown below:

RP = w1R1 + w2R2

Let’s take a simple example. You invested $60,000 in asset 1 that produced 20% returns and $40,000 in asset 2 that produced 12% returns. The weights of the two assets are 60% and 40% respectively.

The portfolio returns will be:

RP = 0.60*20% + 0.40*12% = 16.8%