How to Optimize Portfolio Allocation
A practical workflow to improve allocation quality without overcomplicating the process.
- 1. Audit concentration by holding, sector, and factor cluster.
- 2. Measure volatility and drawdown profile against your target risk.
- 3. Reallocate toward better diversification while preserving core thesis exposure.
- 4. Validate improvement with Sharpe ratio and risk contribution checks.
After structuring the plan, use a portfolio optimization tool to test allocation changes with consistent assumptions.