Rebalancing Bonus Calculator
The volatility-harvesting return from disciplined rebalancing two imperfectly-correlated assets — Booth-Fama style.
Formula
The 'rebalancing bonus' is real but modest (0.1-0.5%/yr) — it comes from systematically selling the risen asset and buying the fallen one. It's largest when assets are volatile and uncorrelated, and it's why a diversified rebalanced portfolio can out-compound its own components' weighted average.
Not financial advice — for informational and analytical use only. Verify all figures with a qualified professional before acting on them.
Disclaimer: This tool is for general informational and estimation purposes only and is not professional financial, tax, accounting or legal advice. All figures are estimates — verify with a qualified professional before making decisions. Read the full disclaimer.
Need rebalancing bonus calculator results fast? Analysts, founders, traders and finance professionals use the Rebalancing Bonus Calculator to skip the spreadsheet and get a defensible answer in one step — free, private and instant.
About Rebalancing Bonus Calculator
The volatility-harvesting return from disciplined rebalancing two imperfectly-correlated assets — Booth-Fama style. The 'rebalancing bonus' is real but modest (0.1-0.5%/yr) — it comes from systematically selling the risen asset and buying the fallen one. It's largest when assets are volatile and uncorrelated, and it's why a diversified rebalanced portfolio can out-compound its own components' weighted average. The governing relationship is bonus ≈ ½(Σwᵢσᵢ² − σ_p²) — the variance reduction from diversification. The Rebalancing Bonus Calculator computes entirely in your browser — free, private (your figures never leave your device) and instant, recalculating live as you change any input.
How to use Rebalancing Bonus Calculator
- 1Enter Asset A volatility (%), Asset B volatility (%), Correlation, Asset A weight (%) into the Rebalancing Bonus Calculator.
- 2The result is computed automatically using bonus ≈ ½(Σwᵢσᵢ² − σ_p²) — the variance reduction from diversification — there is no button to press.
- 3Change any input to model a different scenario, then copy or share the result.
Why use Rebalancing Bonus Calculator?
- ✓Computes rebalancing bonus calculator instantly with the correct formula — no spreadsheet needed
- ✓100% free and unlimited, with no sign-up, login or paywall
- ✓Runs entirely in your browser, so the figures you enter stay private
- ✓Shows the formula, a live worked example and references so you can defend the number
Frequently asked questions
What is the formula behind the Rebalancing Bonus Calculator?+
Rebalancing Bonus Calculator uses bonus ≈ ½(Σwᵢσᵢ² − σ_p²) — the variance reduction from diversification. The 'rebalancing bonus' is real but modest (0. The tool substitutes your actual inputs into this relationship and shows the worked example step by step.
What inputs does the Rebalancing Bonus Calculator need?+
Enter Asset A volatility (%), Asset B volatility (%), Correlation, Asset A weight (%) and the result updates immediately — there is no button to press. Change any value to model a different scenario in real time.
Is the Rebalancing Bonus Calculator free, and is my data private?+
Yes — it is completely free with no sign-up or usage limit, and it runs entirely in your browser, so the numbers you enter are never uploaded or stored on any server. It is for informational and analytical use, not financial advice.
What should I watch out for when using the Rebalancing Bonus Calculator?+
1-0.5%/yr) — it comes from systematically selling the risen asset and buying the fallen one. It's largest when assets are volatile and uncorrelated, and it's why a diversified rebalanced portfolio can out-compound its own components' weighted average.
What is the Rebalancing Bonus Calculator based on?+
The method follows authoritative sources: Booth & Fama (1992) — diversification returns. The formula and references are shown on the page so you can verify and cite the result.
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