Calculating Expected Portfolio Returns and Portfolio Variances

  Рет қаралды 329,727

FinanceKid

FinanceKid

Күн бұрын

Пікірлер: 170
@kristacloud3270
@kristacloud3270 10 ай бұрын
By far the best video on calculating the expected returns and variances! Thank you for posting this
@suzannedoyle5392
@suzannedoyle5392 4 жыл бұрын
THANK YOU, THANK YOU, THANK YOU!!!!!! I wish you were my teacher!!! This video explained it all versus the entire semester at my school when I learned nothing! I so appreciate your time in making this video. :)
@Zamo14390
@Zamo14390 6 жыл бұрын
before i wrote my test today i decided to watch this video and a similar question came up... Thank you so much for the upload
@markgenuelparadero8590
@markgenuelparadero8590 5 жыл бұрын
Expected value of the return of the portfolio is 2.725%. Variance is 2.80%. Standard deviation is 16.73%. So the range is from -14.005% to 19.455% within 1 standard deviation.
@angelakevin504
@angelakevin504 2 жыл бұрын
😂😂😂
@rosymoon99
@rosymoon99 3 жыл бұрын
This is the best video explaining how to calculate the Variance of a portfolio! Thanks so much for making such good content.
@jeniececollazo7033
@jeniececollazo7033 5 жыл бұрын
There's so many steps to this it's not funny. thank you so much for the video. You help me figure out my homework problem.
@dianecai2035
@dianecai2035 4 жыл бұрын
this is the most helpful video on this subject ever. i have a test in a couple hours and this helped me out so much
@hasanmahmud8449
@hasanmahmud8449 2 жыл бұрын
I swear to God you saved my grade. wish my teachers in school taught me like these. thank you for this vid
@키아나-c6v
@키아나-c6v 2 жыл бұрын
such a good video. my investments professor doesn't even explain anything. so this is soooooooooooo helpful
@alexu5401
@alexu5401 2 жыл бұрын
Thank you very much Sir, following you from Madrid, Spain. I will no longer skip my financial management lectures :)
@haretztj4682
@haretztj4682 2 жыл бұрын
may I know where 1/3 came from in Example #2? EDIT: I'm assuming because there's 3 stocks, we use 1/3 and if there's 4 stocks, we use 1/4? Idk
@olivejess8957
@olivejess8957 5 жыл бұрын
Having a great portfolio management is really important because it will help you earn more returns from the stock market compared to when doing some guessing, you know you don't want to mess around with your investment capital
@natalyak.134
@natalyak.134 5 жыл бұрын
My portfolio looks good but it's just not what anyone would want to have lol
@timyoon733
@timyoon733 5 жыл бұрын
I advice anyone who wants to have a perfect portfolio should first invest in the hands of a pro so they can share their knowledge with you then maybe later on you start investing independently so you don't end up making my mistakes
@ferrisfitzgerald7769
@ferrisfitzgerald7769 5 жыл бұрын
TIM YOON For me I think the problem here is looking an expert that can be trusted with my money. Do you recommend any?
@stevejones161
@stevejones161 5 жыл бұрын
Not all Investment expert really know what they are doing so it’s been hard for me finding one
@timyoon733
@timyoon733 5 жыл бұрын
Ferris Fitzgerald I can recommend Mr Rogan Colbert because I’ve been working with him for some time now with no complications. Connect with him at Roganfelixcolbert(ä)gmaïl•com
@lianliu5445
@lianliu5445 2 жыл бұрын
Thank you for explaining it clearly. But there's only one question that at 8:08 if the way you showed us is wrong, what's the right way to calculate it. Maybe the following example cannot explain this.
@LorraineSamu
@LorraineSamu 5 жыл бұрын
Hi FinanceKid, i got an expected return of portfolio as 2.725% Variance of 0.02800 and SD of 0.16733. Please share your answer so that we can check if we understood the concept. looking forward to your valued response. Thanks for your informed video xoxo
@DanielRicardo13
@DanielRicardo13 8 ай бұрын
How do you get the Standard Deviation ?
@kingmoe1545
@kingmoe1545 5 жыл бұрын
I don’t know if finance is for me Anymore 😂 might change to marketing
@cerise5317
@cerise5317 4 жыл бұрын
😭😭😂😂😂
@franksomuahagyarko3074
@franksomuahagyarko3074 3 жыл бұрын
Awwww😂😂😭
@adelpea
@adelpea 3 жыл бұрын
am doing marketing but still had to have a finance mod! this tutorial is a saviour
@alexyoung2471
@alexyoung2471 3 жыл бұрын
Finance is just plain boring, and that's coming from a professional trader of 12 years lol. I almost majored in finance but opted for business analytics and operations management instead.
@PorshaLaVieBelle
@PorshaLaVieBelle 2 жыл бұрын
I promise it’s not hard. Just plugging in numbers and adding and subtracting.
@sarahserwar5909
@sarahserwar5909 9 ай бұрын
Exceptionally Useful, THANK YOU SO MUCH
@jairusroque3862
@jairusroque3862 5 жыл бұрын
yo this finance course is hard af. i was in class writing notes and i remember thinking, "this is like writing in chinese. idk whats going on"
@FF-ie6sd
@FF-ie6sd 4 жыл бұрын
Jairus Roque this is middle school lvl stuff. If you find this hard you might have a problem.
@antonioromero878
@antonioromero878 4 жыл бұрын
Your grammar speaks for itself..
@jairusroque3862
@jairusroque3862 4 жыл бұрын
@@FF-ie6sd this is a college level course what? Buddy u got a problem
@jairusroque3862
@jairusroque3862 4 жыл бұрын
@@antonioromero878 I'm not writing an essay pal, especially for weirdo grammar nazi's on youtube lol
@FF-ie6sd
@FF-ie6sd 4 жыл бұрын
@@jairusroque3862 Yeah like calculus is hard lmfao even middle school students can do calc1,2,3. They are just algebra.
@poornimack1760
@poornimack1760 3 жыл бұрын
Wonderfull explanation greetings from India 🇮🇳
@MossA-ox7ys
@MossA-ox7ys 3 жыл бұрын
Very good review for my FIN301 exam, thankyou!
@zachghilino8392
@zachghilino8392 2 жыл бұрын
is this the same as σ^ 2p = (wAσA)^2 + (wB σB )^2 + 2wAwB Cov(rA,rB ). It seems like it's leaving out the covariance part but the formula is confusing.
@thakgalangmphahlele5582
@thakgalangmphahlele5582 5 жыл бұрын
you are a life saver!! you saving degrees..@WITS
@sahredwardbongah3140
@sahredwardbongah3140 3 жыл бұрын
thank you Sir, i never understood the topic with my lecturer. God bess you
@sokha55
@sokha55 Жыл бұрын
Thanks for the great video, its very helpful. Anyway, in calculating portfolio variance if the correlation was minus, shall we remove the minus? Thanks b4, found it in an example of valuation books and it kinda confusing
@CanadaDiarieswithEJP
@CanadaDiarieswithEJP 4 ай бұрын
crystal clear.. Thank you very much
@inamarykaleb2100
@inamarykaleb2100 6 жыл бұрын
Greetings to you. I found this video really useful. I tried the last question at the end of the video. If you have the answers please let me know. I want to compare with my answers. I really need to master this. Looking forward to your response.
@milihulugalle9774
@milihulugalle9774 4 жыл бұрын
Expected return = 2.75% AND Variance = 2.8%
@nihalkenawy6547
@nihalkenawy6547 5 жыл бұрын
why in example 2 you find averge return for each stock then multiple it by weight of each return while in example 4 you multiple the weight by return then the result multiplied by the probability of each state which is opposite of example 1
@stewardnyasulu9589
@stewardnyasulu9589 4 жыл бұрын
He was merging the expected returns for each stock in each of the assets, which are Boom, and bust. He was simplifying their portfolio. Nevertheless, my question is, why did he use 1/3 as the weight portfolio for example two?
@raminalibeyli9243
@raminalibeyli9243 5 жыл бұрын
I got 2,725 for a) and 2,8 for b) in bonus question
@TheGeminancer
@TheGeminancer 4 жыл бұрын
you got both answers right
@fiosa1000
@fiosa1000 4 жыл бұрын
Expected Return 2.725% and Variance 0.028001
@contentcreator5161
@contentcreator5161 2 жыл бұрын
This is so wonderfully explained!
@williama.rivera9414
@williama.rivera9414 Жыл бұрын
Excellent presentation. One question, how the return of the stocks is determined under each state of economy? Ex, using historical data or other assumptions. Thank you for teaching
@nfl...3268
@nfl...3268 4 күн бұрын
how do you found the 10.368 and 2.592?? 6:54
@tauroshedgefunds473
@tauroshedgefunds473 2 ай бұрын
at 6.40, he multiplied the state of probability again with squared number. Why did he do that? The actual variance calculation at this point is taking the whole summation average. And Std Deviation is sqrt(variance)
@lonnette24
@lonnette24 6 жыл бұрын
It seems like we all got a different answer for the bonus question
@adelnemes7306
@adelnemes7306 4 жыл бұрын
Excellent video. Thank you,
@richardgordon
@richardgordon 4 жыл бұрын
Really well explained! Many thanks 🙏
@ezravalentine4045
@ezravalentine4045 2 жыл бұрын
Hey man... Could really do these table in my exam( time limits) please make another video for future students to be able to do it from basic maths principals.... Thank you though 🏂
@wenkaiyang1487
@wenkaiyang1487 2 жыл бұрын
Is there anywhere we could find those numbers directly or each management firm has to calculate by themselves?
@sushanthvm9267
@sushanthvm9267 Ай бұрын
very nice video
@JonesDawg
@JonesDawg 5 жыл бұрын
Damodaran calculates the variance of a portfolio with the deviation of the actual returns from the expected return. What is the difference with this version? Thanks.
@ilybarbiegirl
@ilybarbiegirl 3 жыл бұрын
So helpful thank you!
@xcsx6602
@xcsx6602 4 жыл бұрын
This is AMAZING!
@uniteyourself4154
@uniteyourself4154 3 жыл бұрын
Helpful thanks for your support
@wanjadouglas3058
@wanjadouglas3058 4 жыл бұрын
Frank, good job. But in determining the expected return of the portfolio, we mutliply by probabilities, and same even when getting the variance? I feel we have over used the probabilities 😃
@Johnykeys
@Johnykeys 4 жыл бұрын
How do i calculate the covariance and correlation
@biratutolosa3136
@biratutolosa3136 4 жыл бұрын
How to calculate this Question ?1. Mrs. Suzan thinks about investing her money in the stock market. She has the following two stocks in her mind: Stock “A”, and stock “B”. She knows that the economy can either go in recession or it will boom. Being an optimistic investor, she believed the likelihood of observing an economic boom is 65%. In addition she believed that stock A might perform less, thus she decided to allocate 35 % of her investment resources on this stock. You also know the following about your two stocks: State of economy Probability RA RB Boom 25% 4% Recession 4% 15% A. Calculate the expected returns for stock A and stock B B. Calculate the portfolio return C. Calculate the risk (standard deviation) for stock A and for stock B D. Calculate the covariance between stock A and stock B. E. Calculate the correlation between stock A and stock B. F. Calculate the variance of the portfolio G. Calculate the standard deviation of the portfolio H. Interpret the results of coefficients of correlation and justify weather there is diversification or not.
@traffy407
@traffy407 Жыл бұрын
How do we practically determine the probability of state of economy?
@shinebayr408
@shinebayr408 Жыл бұрын
Bro help me
@Ibel33
@Ibel33 4 жыл бұрын
How can I get the probability of state of economy for the real stock variance analysis ?
@isabelobeng5373
@isabelobeng5373 9 ай бұрын
where is the 1/3 coming from at "4.13 minutes in the video" when calculating the portfolio expected return of stock A stock B stock C ??
@TheRealChristianPress
@TheRealChristianPress 9 ай бұрын
Thank you!
@titanbenz9686
@titanbenz9686 3 жыл бұрын
For the tables I’ve seen some tables which doesn’t include the probability of the economy , please how do we find for the probability
@palmer3584
@palmer3584 2 ай бұрын
is there one on covariance
@sarmadrizvi
@sarmadrizvi 5 жыл бұрын
Expected return of the portfolio = 2.72% Variance of the portfolio= 1.8%
@jananiravinag
@jananiravinag 4 жыл бұрын
The Expected return of portfolio is 6.5% and the Variance is .38%
@piyushseth2905
@piyushseth2905 4 жыл бұрын
Can someone confirm the answer of bonus question I got A) 2.675 Expected returns B) 0.177% variance
@davidubay8225
@davidubay8225 Жыл бұрын
Thank you!!!
@rickjames5560
@rickjames5560 4 жыл бұрын
@financekid would you mind share the anwsers to the bouns question.
@noahfogel9692
@noahfogel9692 4 жыл бұрын
very helpful thank you
@VedeninaMS
@VedeninaMS 6 жыл бұрын
Expected return of the portfolio 2, 73%, variance is 2,80% right?
@matinajazmine
@matinajazmine 5 жыл бұрын
I got a different variance of 7.306
@samsonkarisa128
@samsonkarisa128 5 жыл бұрын
I got E[R]P as 2.725% and the portfolios variance as 2.80%
@StockSpotlightPodcast
@StockSpotlightPodcast 2 жыл бұрын
Is the expected return of an asset its CAGR or alpha?
@tahitymehranabdullah6808
@tahitymehranabdullah6808 10 ай бұрын
there aint nth simple bout this but thanks for making it bearable
@arbinlatief1262
@arbinlatief1262 4 жыл бұрын
In example 3 what are 70% and _20% are they expected returns?
@cncarrie2560
@cncarrie2560 5 жыл бұрын
Sorry, I am confused about how to calculate the product of the portfolio variance. May you explain in details? Thanks
@jellenemae8823
@jellenemae8823 4 жыл бұрын
Wow this helps a lot
@yashmirasanthika9801
@yashmirasanthika9801 3 жыл бұрын
Suppose a company has a beta of 1.5, and the market return is 10% on 1-year treasury bills which offers 6% hat is the expected return evaluate the answer... please help to find the answer
@nousayba1343
@nousayba1343 4 жыл бұрын
is the ER 3.1? and the VAR 306.79?
@willbaldwin4178
@willbaldwin4178 2 жыл бұрын
For the bonus question I got a variance of 1.518%.
@scooby7877
@scooby7877 2 жыл бұрын
portfolio variance looks exactly the same as finding the co variance, im missing what the difference is?
@benjaminberuh6925
@benjaminberuh6925 2 жыл бұрын
Thank you
@romanbiyadglegni7685
@romanbiyadglegni7685 4 жыл бұрын
this is good tanks sir
@palvirkaur29
@palvirkaur29 3 жыл бұрын
what does a negative weight in a portfolio mean?
@cjohnson9211
@cjohnson9211 Жыл бұрын
Sorry this may be late, but a negative weight means you're shorting it
@jelordferrer2495
@jelordferrer2495 4 жыл бұрын
What if only boom has a probability but bust don't have? Can you help me?
@ntcuong01ct1
@ntcuong01ct1 4 жыл бұрын
Dear friends, the XYZ company have multiple child companies, I can see each child company is "product" in the product portfolio. How can I define return or risk of each company?. Thanks.
@ahmedalsharrah1225
@ahmedalsharrah1225 2 жыл бұрын
is it always 1/3?
@stewardnyasulu9589
@stewardnyasulu9589 4 жыл бұрын
Why is the portfolio weight 1/3 for example 2
@nenyejudith
@nenyejudith 3 жыл бұрын
Because the 3 stocks in the portfolio are equally weighted. So each stock will have a weighting of 1/3
@Rayden_CVS
@Rayden_CVS 4 жыл бұрын
Bonus question Expected return = 2.725% Variance = 2.68%
@tobehuman5226
@tobehuman5226 5 жыл бұрын
Where can i get the answer to the bonus question
@thelittlemathspace
@thelittlemathspace 3 жыл бұрын
I got 2.03 for the expected return and 295.55 for the variance seems I’m wrong I followed the steps
@hangbuithiminh3987
@hangbuithiminh3987 6 жыл бұрын
love your vid very much
@Anessa_wo
@Anessa_wo 4 жыл бұрын
thank youu
@apoorvatiwary3359
@apoorvatiwary3359 4 жыл бұрын
What is the answer for example 4
@mphosylviaramalamula2667
@mphosylviaramalamula2667 7 жыл бұрын
good example
@dikshamunogee5576
@dikshamunogee5576 6 жыл бұрын
just need more chapters like theory of utility, EMH, state preference
@financekid3163
@financekid3163 6 жыл бұрын
Wish I had the time! I will eventually reach those topics
@HawkPlatinum
@HawkPlatinum 6 жыл бұрын
Thank you for explaining it in a visual, comprehensible way. Can you give us the correct answer, so we can check if we got everything right?
@rickjames5560
@rickjames5560 4 жыл бұрын
@@financekid3163 HI Finane Kid, Would you please share the anwsers to the bonus question. Would be appreciated.
@scottforesgaming
@scottforesgaming 5 жыл бұрын
Thankkkk uuu
@navneetkaur8328
@navneetkaur8328 5 жыл бұрын
How 1/3 is calculated
@sarmadrizvi
@sarmadrizvi 5 жыл бұрын
Stocks are equally weighted.
@luwi_live
@luwi_live 4 жыл бұрын
2.725 % expected return , 4.68% variance
@jafferleibiofficial8587
@jafferleibiofficial8587 4 жыл бұрын
What is book name author name?
@maithrilive
@maithrilive Жыл бұрын
good job
@mphosylviaramalamula2667
@mphosylviaramalamula2667 7 жыл бұрын
please add your website
@bigshot9558
@bigshot9558 6 жыл бұрын
Why is it one over three
@angelisjessica948
@angelisjessica948 6 жыл бұрын
Because the stocks are equally weighted, the investor invests one third in stock a, one third in stock b, and one third in stock c
@XAUGEEK
@XAUGEEK Жыл бұрын
@@angelisjessica948 wat in the question made us know its 1/3?
@pittedmetal
@pittedmetal 3 жыл бұрын
Thank you so much! The CFA level 1 reading explains this horribly.
@JM-wn6gu
@JM-wn6gu 6 жыл бұрын
I got 0.1845 as variance
@preakyzvidzai9829
@preakyzvidzai9829 6 жыл бұрын
i got 0.122% for the bonus question
@kaluwemulube1453
@kaluwemulube1453 5 жыл бұрын
Found a variance of 7.16386%
@carlosalbertonievesperez7276
@carlosalbertonievesperez7276 6 жыл бұрын
is the Variance for the Bonus question 10.84%?
@preakyzvidzai9829
@preakyzvidzai9829 6 жыл бұрын
can you send your workings
@mr.richard3109
@mr.richard3109 6 жыл бұрын
I got 2.8%
@nelgimjacobs4004
@nelgimjacobs4004 6 жыл бұрын
I got 1.664% ,
@O1986J
@O1986J 6 жыл бұрын
Mr. Richard i also got 2.8001. Anybody else?
@mr.richard3109
@mr.richard3109 6 жыл бұрын
Oliver Jones well done :)
@nelgimjacobs4004
@nelgimjacobs4004 6 жыл бұрын
I got 1.664%
@felipeg7415
@felipeg7415 5 жыл бұрын
You seem to know a lot about the topic however your explanation is a bit messy and quite stressful to understand.
@StarCTK51
@StarCTK51 6 жыл бұрын
I got Expected return of portfolio 5.5% and variance is 3.43375% plz tell us the answers :(
@mishujhamat7341
@mishujhamat7341 4 жыл бұрын
Its too fast 🤥🙄
@MoonLight-fs6gl
@MoonLight-fs6gl 5 жыл бұрын
very bad explanation
@porterparech9459
@porterparech9459 5 жыл бұрын
i am so happy i have Sir Reed Cooper handling my investment,thanks to him am making more profit under him i thank God there are people like this in the world
@aracoggin1154
@aracoggin1154 5 жыл бұрын
how do i connect with such a man he sounds so promising
@duffygriffin9252
@duffygriffin9252 5 жыл бұрын
what a coincidence i have been investing with him for more than 6 months now
@duffygriffin9252
@duffygriffin9252 5 жыл бұрын
@@aracoggin1154 reeddcooper (@ ) gmail . com
@paulinemccrre2911
@paulinemccrre2911 5 жыл бұрын
@@duffygriffin9252 i just sent him a message on his email
@duffygriffin9252
@duffygriffin9252 5 жыл бұрын
@@aracoggin1154 +44 7727717803
@Alexander123321ify
@Alexander123321ify 4 жыл бұрын
you didnt even answer how to do the bonus question smh
@SphereofTime
@SphereofTime 4 ай бұрын
4:52 stock variance=
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