Portfolio Sector Allocation Calculator

Formula

The formula to calculate the Sector Allocation (SA) is:

\[ SA = \left( \frac{V}{TV} \right) \times 100 \]

Where:

SA – The sector allocation in percentage (%).
V – The value of investments in a particular sector in dollars ($).
TV – The total value of the portfolio in dollars ($).

Definition

Sector Allocation (SA): The percentage of the total portfolio value that is invested in a particular sector.
Value of Investments in Sector (V): The total value of investments in a specific sector.
Total Value of Portfolio (TV): The total value of all investments in the portfolio.

Example

Let's say the value of investments in a sector (V) is $50,000 and the total value of the portfolio (TV) is $200,000. Using the formula:

\[ SA = \left( \frac{50000}{200000} \right) \times 100 = 25 \% \]

So, the sector allocation is 25%.

What is Portfolio Sector Allocation?

Portfolio Sector Allocation is an investment strategy that involves dividing an investment portfolio across various sectors of the economy to reduce risk and increase potential returns. This strategy aims to take advantage of the fact that different sectors of the economy perform differently under different market conditions. By investing in a diverse range of sectors, investors can potentially protect themselves from downturns in any one sector and increase their chances of achieving a positive return on their investments.