Calculating Expected Portfolio Returns and Portfolio Variances 

This is the best video explaining how to calculate the Variance of a portfolio! Thanks so much for making such good content.

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

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. :)

By far the best video on calculating the expected returns and variances! Thank you for posting this

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

I swear to God you saved my grade. wish my teachers in school taught me like these. thank you for this vid

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.

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.

such a good video. my investments professor doesn't even explain anything. so this is soooooooooooo helpful

Exceptionally Useful, THANK YOU SO MUCH

This is so wonderfully explained!

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

Very good review for my FIN301 exam, thankyou!

Thank you very much Sir, following you from Madrid, Spain. I will no longer skip my financial management lectures :)

Really well explained! Many thanks 🙏

Excellent video. Thank you,

thank you Sir, i never understood the topic with my lecturer. God bess you

Wonderfull explanation greetings from India 🇮🇳

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

you are a life saver!! you saving degrees..@WITS

This is AMAZING!

Is there anywhere we could find those numbers directly or each management firm has to calculate by themselves?

So helpful thank you!

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.

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

I don’t know if finance is for me Anymore 😂 might change to marketing

Expected Return 2.725% and Variance 0.028001

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.

Thank you!

Helpful thanks for your support

How can I get the probability of state of economy for the real stock variance analysis ?

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 😃

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.

Sorry, I am confused about how to calculate the product of the portfolio variance. May you explain in details? Thanks

Thank you!!!

@financekid would you mind share the anwsers to the bouns question.

How do i calculate the covariance and correlation

very helpful thank you

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

It seems like we all got a different answer for the bonus question

Is the expected return of an asset its CAGR or alpha?

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.

Wow this helps a lot

good example

Thank you

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

Where can i get the answer to the bonus question

I got 2,725 for a) and 2,8 for b) in bonus question

thank you

Thankkkk uuu

In example 3 what are 70% and _20% are they expected returns?

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 🏂

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.

is the ER 3.1? and the VAR 306.79?

this is good tanks sir

What if only boom has a probability but bust don't have? Can you help me?

thank youu

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"

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

love your vid very much

there aint nth simple bout this but thanks for making it bearable

Can someone confirm the answer of bonus question I got A) 2.675 Expected returns B) 0.177% variance

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

I got 2.03 for the expected return and 295.55 for the variance seems I’m wrong I followed the steps

For the bonus question I got a variance of 1.518%.

is it always 1/3?

please add your website

What is book name author name?

Expected return of the portfolio 2, 73%, variance is 2,80% right?

portfolio variance looks exactly the same as finding the co variance, im missing what the difference is?

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 ??

What is the answer for example 4

Expected return of the portfolio = 2.72% Variance of the portfolio= 1.8%

I got 1.664%

Bonus question Expected return = 2.725% Variance = 2.68%

just need more chapters like theory of utility, EMH, state preference

what does a negative weight in a portfolio mean?

Found a variance of 7.16386%

I got 0.1845 as variance

Quite an amazing video on here, the market is complex and very competitive, I invest and make profits from my trades best regards to Mr Ray Perkins mentorship/guidance, he’s doing good job on my behalf.

How do we practically determine the probability of state of economy?

I got Expected return of portfolio 5.5% and variance is 3.43375% plz tell us the answers :(

i got 0.122% for the bonus question

Why is the portfolio weight 1/3 for example 2

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.

How 1/3 is calculated

Thank you so much! The CFA level 1 reading explains this horribly.

2.725 % expected return , 4.68% variance

is the Variance for the Bonus question 10.84%?

Why is it one over three

You seem to know a lot about the topic however your explanation is a bit messy and quite stressful to understand.

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

Its too fast 🤥🙄

very bad explanation

you didnt even answer how to do the bonus question smh

good job