Calculating Expected Portfolio Returns and Portfolio Variances

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  • Опубліковано 11 вер 2024

КОМЕНТАРІ • 164

  • @suzannedoyle5392
    @suzannedoyle5392 3 роки тому +18

    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. :)

  • @markgenuelparadero8590
    @markgenuelparadero8590 5 років тому +19

    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.

  • @Zamo14390
    @Zamo14390 6 років тому +9

    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

  • @kristacloud3270
    @kristacloud3270 6 місяців тому +1

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

  • @olivejess8957
    @olivejess8957 4 роки тому +28

    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 4 роки тому

      My portfolio looks good but it's just not what anyone would want to have lol

    • @timyoon733
      @timyoon733 4 роки тому +1

      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 4 роки тому +1

      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 4 роки тому

      Not all Investment expert really know what they are doing so it’s been hard for me finding one

    • @timyoon733
      @timyoon733 4 роки тому +3

      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

  • @rosymoon99
    @rosymoon99 3 роки тому +4

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

  • @jeniececollazo7033
    @jeniececollazo7033 4 роки тому +3

    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.

  • @sarahserwar5909
    @sarahserwar5909 5 місяців тому +1

    Exceptionally Useful, THANK YOU SO MUCH

  • @hasanmahmud8449
    @hasanmahmud8449 2 роки тому

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

  • @kingmoe1545
    @kingmoe1545 5 років тому +71

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

    • @cerisesmith5317
      @cerisesmith5317 3 роки тому

      😭😭😂😂😂

    • @franksomuahagyarko3074
      @franksomuahagyarko3074 3 роки тому

      Awwww😂😂😭

    • @adelpea
      @adelpea 3 роки тому +1

      am doing marketing but still had to have a finance mod! this tutorial is a saviour

    • @alexyoung2471
      @alexyoung2471 2 роки тому

      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 роки тому +4

      I promise it’s not hard. Just plugging in numbers and adding and subtracting.

  • @dianecai2035
    @dianecai2035 4 роки тому +1

    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

  • @user-si8yb7sk9u
    @user-si8yb7sk9u 2 роки тому +1

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

  • @LorraineSamu
    @LorraineSamu 4 роки тому +5

    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 3 місяці тому

      How do you get the Standard Deviation ?

  • @zachghilino8392
    @zachghilino8392 2 роки тому +2

    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.

  • @alexu5401
    @alexu5401 2 роки тому

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

    • @haretztj4682
      @haretztj4682 2 роки тому

      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

  • @lianliu5445
    @lianliu5445 2 роки тому +1

    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.

  • @fiosa1000
    @fiosa1000 3 роки тому +4

    Expected Return 2.725% and Variance 0.028001

  • @MossA-ox7ys
    @MossA-ox7ys 2 роки тому +1

    Very good review for my FIN301 exam, thankyou!

  • @raminalibeyli9243
    @raminalibeyli9243 4 роки тому +9

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

  • @thakgalangmphahlele5582
    @thakgalangmphahlele5582 4 роки тому +2

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

  • @poornimack1760
    @poornimack1760 2 роки тому

    Wonderfull explanation greetings from India 🇮🇳

  • @jairusroque3862
    @jairusroque3862 5 років тому +9

    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 роки тому +2

      Jairus Roque this is middle school lvl stuff. If you find this hard you might have a problem.

    • @antonioromero878
      @antonioromero878 3 роки тому

      Your grammar speaks for itself..

    • @jairusroque3862
      @jairusroque3862 3 роки тому +1

      @@FF-ie6sd this is a college level course what? Buddy u got a problem

    • @jairusroque3862
      @jairusroque3862 3 роки тому +1

      @@antonioromero878 I'm not writing an essay pal, especially for weirdo grammar nazi's on youtube lol

    • @FF-ie6sd
      @FF-ie6sd 3 роки тому

      @@jairusroque3862 Yeah like calculus is hard lmfao even middle school students can do calc1,2,3. They are just algebra.

  • @contentcreator5161
    @contentcreator5161 Рік тому

    This is so wonderfully explained!

  • @inamarykaleb2100
    @inamarykaleb2100 6 років тому +6

    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.

  • @lonnette24
    @lonnette24 6 років тому +10

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

  • @ezravalentine4045
    @ezravalentine4045 Рік тому +1

    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 🏂

  • @sahredwardbongah3140
    @sahredwardbongah3140 3 роки тому

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

  • @nihalkenawy6547
    @nihalkenawy6547 5 років тому +3

    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 3 роки тому

      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?

  • @williama.rivera9414
    @williama.rivera9414 Рік тому

    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

  • @wenkaiyang1487
    @wenkaiyang1487 2 роки тому +1

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

  • @richardgordon
    @richardgordon 4 роки тому

    Really well explained! Many thanks 🙏

  • @Johnykeys
    @Johnykeys 4 роки тому +1

    How do i calculate the covariance and correlation

  • @sokha55
    @sokha55 11 місяців тому

    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

  • @tahitymehranabdullah6808
    @tahitymehranabdullah6808 6 місяців тому

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

  • @TheRealChristianPress
    @TheRealChristianPress 4 місяці тому

    Thank you!

  • @VedeninaMS
    @VedeninaMS 5 років тому +14

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

    • @matinajazmine
      @matinajazmine 5 років тому

      I got a different variance of 7.306

    • @samsonkarisa128
      @samsonkarisa128 5 років тому +1

      I got E[R]P as 2.725% and the portfolios variance as 2.80%

  • @adelnemes7306
    @adelnemes7306 3 роки тому

    Excellent video. Thank you,

  • @JonesDawg
    @JonesDawg 5 років тому

    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.

  • @isabelobeng5373
    @isabelobeng5373 4 місяці тому

    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 ??

  • @ilybarbiegirl
    @ilybarbiegirl 3 роки тому

    So helpful thank you!

  • @Ibel33
    @Ibel33 4 роки тому +1

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

  • @xcsx6602
    @xcsx6602 3 роки тому

    This is AMAZING!

  • @wanjadouglas3058
    @wanjadouglas3058 4 роки тому

    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 😃

  • @uniteyourself4154
    @uniteyourself4154 3 роки тому

    Helpful thanks for your support

  • @davidubay8225
    @davidubay8225 10 місяців тому

    Thank you!!!

  • @titanbenz9686
    @titanbenz9686 2 роки тому

    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

  • @piyushseth2905
    @piyushseth2905 3 роки тому +1

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

  • @yashmirasanthika9801
    @yashmirasanthika9801 2 роки тому

    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

  • @scooby7877
    @scooby7877 2 роки тому

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

  • @noahfogel9692
    @noahfogel9692 4 роки тому

    very helpful thank you

  • @cncarrie2560
    @cncarrie2560 5 років тому

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

  • @benjaminberuh6925
    @benjaminberuh6925 Рік тому

    Thank you

  • @biratutolosa3136
    @biratutolosa3136 4 роки тому

    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.

  • @jellenemae8823
    @jellenemae8823 4 роки тому

    Wow this helps a lot

  • @stockspotlightpodcast
    @stockspotlightpodcast 2 роки тому

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

  • @romanbiyadglegni7685
    @romanbiyadglegni7685 3 роки тому

    this is good tanks sir

  • @arbinlatief1262
    @arbinlatief1262 4 роки тому

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

  • @jelordferrer2495
    @jelordferrer2495 4 роки тому

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

  • @ntcuong01ct1
    @ntcuong01ct1 3 роки тому

    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.

  • @sarmadrizvi
    @sarmadrizvi 4 роки тому +2

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

    • @jananiravinag
      @jananiravinag 4 роки тому

      The Expected return of portfolio is 6.5% and the Variance is .38%

  • @willbaldwin4178
    @willbaldwin4178 Рік тому

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

  • @rickjames5560
    @rickjames5560 4 роки тому

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

  • @nousayba1343
    @nousayba1343 3 роки тому

    is the ER 3.1? and the VAR 306.79?

  • @thelittlemathspace
    @thelittlemathspace 2 роки тому

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

  • @ahmedalsharrah1225
    @ahmedalsharrah1225 2 роки тому

    is it always 1/3?

  • @Anessa_wo
    @Anessa_wo 3 роки тому

    thank youu

  • @mphosylviaramalamula2667
    @mphosylviaramalamula2667 6 років тому

    good example

  • @tobehuman5226
    @tobehuman5226 4 роки тому

    Where can i get the answer to the bonus question

  • @traffy407
    @traffy407 Рік тому

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

  • @scottforesgaming
    @scottforesgaming 5 років тому

    Thankkkk uuu

  • @apoorvatiwary3359
    @apoorvatiwary3359 3 роки тому

    What is the answer for example 4

  • @Rayden_CVS
    @Rayden_CVS 4 роки тому

    Bonus question Expected return = 2.725% Variance = 2.68%

  • @palvirkaur29
    @palvirkaur29 3 роки тому

    what does a negative weight in a portfolio mean?

    • @cjohnson9211
      @cjohnson9211 9 місяців тому

      Sorry this may be late, but a negative weight means you're shorting it

  • @jafferleibiofficial8587
    @jafferleibiofficial8587 4 роки тому

    What is book name author name?

  • @stewardnyasulu9589
    @stewardnyasulu9589 3 роки тому

    Why is the portfolio weight 1/3 for example 2

    • @nenyejudith
      @nenyejudith 2 роки тому

      Because the 3 stocks in the portfolio are equally weighted. So each stock will have a weighting of 1/3

  • @hangbuithiminh3987
    @hangbuithiminh3987 6 років тому

    love your vid very much

  • @maithrilive
    @maithrilive 11 місяців тому

    good job

  • @mphosylviaramalamula2667
    @mphosylviaramalamula2667 6 років тому

    please add your website

  • @luwi_live
    @luwi_live 3 роки тому +1

    2.725 % expected return , 4.68% variance

  • @dikshamunogee5576
    @dikshamunogee5576 6 років тому

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

    • @financekid3163
      @financekid3163  6 років тому

      Wish I had the time! I will eventually reach those topics

    • @HawkPlatinum
      @HawkPlatinum 6 років тому +2

      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 роки тому

      @@financekid3163 HI Finane Kid,
      Would you please share the anwsers to the bonus question. Would be appreciated.

  • @JM-wn6gu
    @JM-wn6gu 6 років тому +2

    I got 0.1845 as variance

  • @pittedmetal
    @pittedmetal 2 роки тому

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

  • @kaluwemulube1453
    @kaluwemulube1453 4 роки тому

    Found a variance of 7.16386%

  • @navneetkaur8328
    @navneetkaur8328 4 роки тому

    How 1/3 is calculated

    • @sarmadrizvi
      @sarmadrizvi 4 роки тому

      Stocks are equally weighted.

  • @nelgimjacobs4004
    @nelgimjacobs4004 6 років тому

    I got 1.664%

  • @StarCTK51
    @StarCTK51 5 років тому

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

  • @bigshot9558
    @bigshot9558 5 років тому

    Why is it one over three

    • @angelisjessica948
      @angelisjessica948 5 років тому

      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 Рік тому

      @@angelisjessica948 wat in the question made us know its 1/3?

  • @preakyzvidzai9829
    @preakyzvidzai9829 6 років тому +1

    i got 0.122% for the bonus question

  • @carlosalbertonievesperez7276
    @carlosalbertonievesperez7276 6 років тому

    is the Variance for the Bonus question 10.84%?

  • @felipeg7415
    @felipeg7415 5 років тому +3

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

  • @mishujhamat7341
    @mishujhamat7341 3 роки тому

    Its too fast 🤥🙄

  • @MoonLight-fs6gl
    @MoonLight-fs6gl 4 роки тому +1

    very bad explanation

  • @porterparech9459
    @porterparech9459 4 роки тому +1

    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 4 роки тому +1

      how do i connect with such a man he sounds so promising

    • @duffygriffin9252
      @duffygriffin9252 4 роки тому +1

      what a coincidence i have been investing with him for more than 6 months now

    • @duffygriffin9252
      @duffygriffin9252 4 роки тому +1

      @@aracoggin1154 reeddcooper (@ ) gmail . com

    • @paulinemccrre2911
      @paulinemccrre2911 4 роки тому +1

      @@duffygriffin9252 i just sent him a message on his email

    • @duffygriffin9252
      @duffygriffin9252 4 роки тому +1

      @@aracoggin1154 +44 7727717803

  • @Alexander123321ify
    @Alexander123321ify 4 роки тому

    you didnt even answer how to do the bonus question smh

  • @TrevanteEl-te8jw
    @TrevanteEl-te8jw 11 місяців тому

    thank you