Quick Templates
Load a sample portfolio to see how the calculator works, then customize it.
Build Your Portfolio
Add up to 10 positions. Symbols are matched against the built-in correlation matrix; unknown symbols default to 0.3 correlation with everything.
| # | Symbol | Size ($) | Direction | Daily Vol % |
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Open a Risk-Managed AccountWhy Correlation Matters More Than Position Count
Most retail traders equate "number of positions" with "diversification". That is a dangerous shortcut. A trader long EUR/USD, GBP/USD, AUD/USD, and NZD/USD holds four tickers but one bet: short USD. If the dollar spikes 1%, all four positions lose simultaneously. Correlation — not count — determines real diversification.
The 2008 and 2020 Lesson: Correlations Go to 1
During normal markets, gold and equities show correlation around -0.2 to +0.1. During the October 2008 Lehman crisis and the March 2020 COVID crash, correlations between "uncorrelated" assets spiked to 0.8-0.95 within days. Why? Margin calls. When leveraged traders face losses in one asset, they sell whatever they can — including their hedges. Gold, bonds, crypto, and equities all fell together.
This is why the calculator includes a Crisis Mode stress test — it recomputes your VaR assuming all correlations go to 1.0. If your crisis VaR is 2-3× your normal VaR, your portfolio is less diversified than you think.
How Value at Risk (VaR) Is Calculated Here
We use the parametric (variance-covariance) method:
- Step 1: Compute each position's dollar volatility = position_size × daily_vol%
- Step 2: Build the covariance matrix Σ from individual vols and correlations
- Step 3: Portfolio variance = wᵀ Σ w, where w is the vector of signed position sizes
- Step 4: VaR 95% = 1.645 × √(portfolio variance)
The 1.645 multiplier corresponds to the 95th percentile of a normal distribution. Real markets have fatter tails, so treat VaR as a lower bound on actual risk.
How to Actually Diversify
- Mix asset classes: equities, fixed income, commodities (gold), and cash hold different correlations during different regimes.
- Add genuinely negative-correlation hedges: long gold or long USD cash against a risk-on portfolio.
- Cap concentration: no single position should exceed 15-20% of total capital. The calculator flags this automatically.
- Reduce size when vol rises: volatility targeting beats fixed sizing in most backtests.
- Understand ENP: the Effective Number of Positions tells you how many independent bets you actually have. Ten EUR pairs might behave like 1.5 bets.