Bitcoin, gold, stocks, cash
Hedge Mix
Mix bitcoin, gold, a stock index and cash with four sliders and see the expected return, the volatility and an illustrative worst year of the mix, under assumptions you can edit.
What this tool does
Diversification works because assets do not move together. The mixer takes four weights, an expected return and a volatility per asset, and a correlation table, and computes the portfolio’s expected return and volatility with the standard formula. An illustrative worst year at two standard deviations shows how much pain the mix implies. All inputs are editable, because nobody knows the future values and the defaults are only historical ranges.
How to use it
- Move the four sliders; the weights are normalised to one hundred percent.
- Edit the expected return and volatility per asset if you disagree with the defaults.
- Read expected return, volatility, the illustrative worst year and the contribution of each asset to the risk.
Good to know
- Correlations change in a crisis, usually towards one. The defaults are long-run averages.
- Expected returns are assumptions. Change them and see how fragile any allocation is.
- This is a teaching tool and not a recommendation for any allocation.
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