Risk contribution per position
What it shows
Each position's share of the portfolio's total VOLATILITY (not just of its value). It combines a position's weight, its volatility and its link to the rest of the portfolio, showing where the swings really come from.
How to read it
Compare a position's risk contribution with its value share. A coin that is 10% of value but 30% of risk "overpays" in volatility; a small position by amount can drive most of the whole portfolio's swings. This shows where risk truly sits, even when it looks minor by value. A structural description, not advice.
Parameters
- Risk contribution %
- The portion of portfolio volatility attributable to a position; all contributions sum to 100%.
- Positive reading: Contributions close to the value weights: risk is spread evenly.
- Negative reading: One position contributes far more than its value share, which means it dominates the swings.
- Neutral reading: Slight deviations of contribution from the value share.
- Weight × volatility × correlation
- A contribution rises when a position is large, swings hard and moves in step with the rest of the portfolio.