Reference desk / edition 2026.10
Allocation references
Compare allocation rules, their constraints and the estimation assumptions behind the weights.
Calculation references
Equal-weight allocation
A transparent baseline that assigns identical capital weights to a declared number of assets.
Inverse-volatility weights
Normalize inverse standalone volatility while keeping the missing correlation assumption visible.
Two-asset minimum variance
Inspect the analytic long-only variance minimum for exactly two exposures.
Detailed guides
Allocation referencesEqual Weighting Starts With the Universe
A 1/N rule removes one weighting decision, but membership, counting units and rebalance timing still determine the portfolio.
Allocation referencesWhen Inverse Volatility Is, and Is Not, Risk Parity
Inverse-volatility weights equalize weighted standalone volatility. Equal portfolio risk contributions require correlation information except in special cases.
Allocation referencesTwo-Asset Minimum Variance Depends on the Feasible Weights
A closed-form minimum can imply shorting or leverage. Long-only and allocation bounds change the answer without changing the covariance inputs.
Allocation referencesTurnover definitions: count the trades before comparing the number
Distinguish gross trading, half-turnover, cash movements and drift using a fully reconciled synthetic rebalance.
Allocation referencesTransaction cost units: from a quoted rate to portfolio drag
Reconcile basis points, trade notional, ticket fees and portfolio-level drag without confusing a cost assumption with observed execution.