Two Asset Expected Return
Calculator
Results
- Expected return (%)
- 7
- Weight of asset B (%)
- 40
- Contribution of asset A (%)
- 5.399999
- Contribution of asset B (%)
- 1.6
Investing results
| Expected return (%) | 7 |
| Weight of asset B (%) | 40 |
| Contribution of asset A (%) | 5.399999 |
| Contribution of asset B (%) | 1.6 |
formula-map diagram
- Expected return (%)
- 7
- Weight of asset B (%)
- 40
- Contribution of asset A (%)
- 5.399999
- Contribution of asset B (%)
- 1.6
Investing relationship
Formula
E(Rp) = wA × E(RA) + wB × E(RB)= 7
Note
This is not investment advice. It is a simplified model: it applies the displayed standard formula to the figures you entered, ignores taxes, fees, currency effects and credit risk, and assumes cash flows arrive exactly as scheduled. Real markets do not behave that way, and past or projected returns do not guarantee future results. Check the assumptions and consult a licensed adviser before acting on any figure.
More in Investing and markets
See all →Frequently asked questions
How is the expected return of a two-asset portfolio calculated?+
It's the weighted average of each asset's expected return, where the weights are the proportion of the portfolio invested in each asset — for example, 60% in asset A at 8% expected return and 40% in asset B at 4% gives a portfolio expected return of 6.4%.
Does this calculation account for the risk-reducing effect of diversification?+
No — expected return is a simple weighted average regardless of how the two assets move relative to each other, but portfolio risk (volatility) is not a simple weighted average and depends heavily on the correlation between the assets. This calculator addresses return only, not risk.
Why might actual portfolio return differ from the calculated expected return?+
Expected return is a forward-looking estimate based on assumptions about each asset's future performance; actual realized returns depend on what actually happens in the market, which can deviate significantly from any expectation, especially over shorter time periods.
How do the portfolio weights need to be entered?+
Weights should be entered as the proportion of total portfolio value allocated to each asset, and together they should sum to 100% (or 1.0) for the calculation to represent the full portfolio accurately — if you have more than two assets, this specific tool only handles a two-asset split.
Can this method be extended to more than two assets?+
Yes, the same weighted-average logic extends to any number of assets — multiply each asset's expected return by its portfolio weight and sum the results — this calculator simply focuses on the common two-asset case for simplicity.