Portfolio method guides
5 guides to the methods behind portfolio construction and risk analysis. Each one has a definition, the formula, a worked example on a real portfolio, an interactive lab, and the exact way MarketHeist computes it, with the limitations stated up front.
Construction
Equal risk contribution (risk parity)Equal risk contribution sets weights so every holding carries the same share of portfolio risk. The formula, the solver, and a worked All Weather example.Hierarchical risk parity (HRP)Hierarchical risk parity weights a portfolio down a correlation tree instead of inverting the covariance matrix. The three steps, formulas and an example.Portfolio rebalancingRebalancing resets a portfolio to its target weights. What it does, the drift it prevents, and a 60/40 test of never, yearly, quarterly and monthly resets.
Diversification
Effective number of independent betsThe effective number of bets counts the independent sources of risk a portfolio spreads across. Two measures, their formulas, and when they disagree.Risk contributionRisk contribution splits a portfolio's total risk into one share per holding. Formula, a 60/40 worked example and how MarketHeist computes it.
Historical simulation, not advice. Every number is computed by the MarketHeist portfolio engine from monthly total returns, data through Sep 2026.