In this tutorial, we show how to calculate a portfolio's risk and return in Excel. We focus on a portfolio with three stocks, but the methods we use apply to portfolios of any size.

Visit the page below to download the Excel template used in this tutorial:
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You might find the following lessons helpful as well:
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Portfolio return with 3 assets = w1*R1 + w2*R2 + w3*R3
where wi is the investment weight for asset i and Ri is the return for asset i.

Portfolio risk with 3 assets: (w1*σ1)^2 + (w2*σ2)^2 + (w3*σ3)^2 + 2*w1*w2*σ12 + 2*w1*w3*σ13 + 2*w2*w3*σ23
where σi is the volatility of returns for asset i and σij is the covariance of returns between assets i and j.

The Excel functions we use for portfolio return calculations are AVERAGE and SUMPRODUCT.
And, those for portfolio risk calculations are VAR.S and COVARIANCE.S.

0:00 Intro
0:54 Investment weights
2:08 Portfolio return
4:08 Portfolio risk
10:29 Faster method
14:00 Outro

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