How to Optimise The Asset Allocation in Diversiview

Once you have created or imported your portfolio, you can optimise the asset allocation directly from the dashboard.

Two types of optimisations are available at the date of this article:

  1. Calculating the asset allocation for the Minimum Risk Portfolio (also known as the Minimum Variance Portfolio, MVP).
  2. Calculating the asset allocation for the Optimal Portfolio (OP).

For professionals, there is also the ability to calculate allocations for efficient portfolio positions on the Efficient Frontier. Read this article for a step by step example.

Calculating the Asset Allocation for Minimum Risk Portfolio

On the dashboard, locate the green Actions button for the portfolio of your choice and select the Optimise option.

Diversiview Dashboard example showing Optimise option for a user portfolio
Figure 1: Diversiview Dashboard example showing Optimise option for a user portfolio

Follow the steps and will be presented with a selection popup, where you can select:

  • The benchmark that you would like to use; that will inform calculation of portfolio level indicators like Portfolio Sharpe ratio and Portfolio Alpha.
  • The returns method you would like to use – DOOA (the Dual Objective Optimisation Approach that powers Diversiview) is returns agnostic. The optimisation engine works with individual expected returns based on historical data, individual expected returns based on the CAPM model, or your own (user provided) individual expected returns.
  • You can give a name to the order (optimisation run).
  • You can specify weighting constraints that will apply across the portfolio holdings; that is, the minimum and maximum allocations for any of the holdings. You can select the default constraints (min 1%, max 99% for any given holding), or specify your own weighting constraints.

Example selection popup form in Diversiview to select optimisation parameters
Figure 2: Example selection popup form to select optimisation parameters

Once the parameters are selected, click on ‘Calculate’. Your analysis will be sent to processing, and a record of the optimisation will be shown in the bottom part of your dashboard. Click on ‘View Results’ to see the resulting optimised portfolio page.

Example optimisation record on the user dashboard in Diversiview
Figure 3: Example optimisation record on the user dashboard

Calculating the Asset Allocation for the Optimal Portfolio

The steps to calculate the asset allocation for the Optimal Portfolio are very similar to the steps above to calculate the asset allocation for the Minimum Risk Portfolio. Simply select the appropriate option in the Optimise screen and follow the steps as described above.

Example selecting the Optimal Portfolio optimisation option in Diversiview
Figure 4: Example selecting the Optimal Portfolio optimisation option in Diversiview

Need More Help?

If need assistance with the optimisation features, our support team is here to help.

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