Portfolio Return Calculator
Calculates the weighted average return of a two-asset portfolio based on each asset's allocation and individual return. Use it to estimate overall portfolio performance when rebalancing or evaluating asset mix decisions.
About this calculator
A portfolio's overall return is not a simple average of its assets' returns — it must be weighted by how much of your money is in each asset. The formula for a two-asset portfolio is: Portfolio Return = (asset1Weight / 100 × asset1Return) + (asset2Weight / 100 × asset2Return). Each weight represents the percentage of the total portfolio allocated to that asset, so the two weights should sum to 100%. Multiplying each asset's weight (as a decimal) by its return and summing gives the blended return. For example, 60% in an asset returning 10% and 40% in an asset returning 4% produces (0.60 × 10) + (0.40 × 4) = 6 + 1.6 = 7.6%. This concept extends naturally to any number of assets; the two-asset version captures the essential logic of diversification.
How to use
Suppose your portfolio holds 70% in stocks that returned 12% last year and 30% in bonds that returned 3%. Enter 70 for Asset 1 Weight and 12 for Asset 1 Return, then 30 for Asset 2 Weight and 3 for Asset 2 Return. The calculator computes: (70/100 × 12) + (30/100 × 3) = 8.40 + 0.90 = 9.30%. Your blended portfolio return for the year was 9.30% — better than a 50/50 split would have produced, because more capital was allocated to the higher-performing asset.
Frequently asked questions
How do you calculate the weighted return of a portfolio?
Multiply each asset's weight (expressed as a decimal) by its individual return, then sum all the products. For two assets the formula is: Portfolio Return = (asset1Weight / 100 × asset1Return) + (asset2Weight / 100 × asset2Return). The weights must represent the proportion of total portfolio value in each asset and should add up to 100%. This method ensures that assets with larger allocations have a proportionally greater influence on the overall result.
Why do portfolio weights need to add up to 100 percent?
Portfolio weights represent the share of total capital allocated to each asset, so together they must account for the entire portfolio — hence 100%. If weights summed to more than 100%, you would be implying more invested than you actually have; less than 100% would mean some capital is unaccounted for. In practice, small rounding differences are acceptable, but for accurate return calculations it is important to ensure weights are consistent and complete.
What is the difference between weighted portfolio return and simple average return?
A simple average treats every asset equally regardless of how much money is in it. A weighted return adjusts each asset's contribution by its share of the portfolio. For instance, if 90% of your portfolio earns 1% and 10% earns 20%, the simple average is 10.5%, but the weighted return is only 2.9% — a far more accurate picture of actual performance. Weighted return is the standard method used by fund managers and financial analysts to report portfolio-level results.