Optimize your fixed-income portfolio by calculating weighted average duration and laddering symmetry.
Total Portfolio Allocation:
99 %
Weighted Average Duration (WAD):
7.59 Years
Ladder Symmetry Balance Score:
99 / 100
A score of 100 indicates a perfectly equal distribution (33.3% per segment). Lower scores suggest the portfolio is skewed toward specific maturity dates, which may increase reinvestment or interest rate risk.
Weighted Average Duration (WAD) is a crucial metric that measures the overall sensitivity of your bond portfolio to interest rate fluctuations. By weighing the duration of each individual bond segment by its relative size in the portfolio, you can understand how much the total value of your ladder might change if rates rise or fall.
WAD = Σ (Weight_i × Duration_i) / 100
Imagine a sample portfolio distributed with a 33% short-term segment (1 year), a 33% intermediate-term segment (5 years), and a 34% long-term segment (15 years).
What is a balanced ladder?A balanced ladder involves an equal distribution of capital across all chosen maturities, ensuring consistent cash flow and reinvestment opportunities.
Why does duration matter?Duration serves as an essential tool for interest rate risk assessment; the higher the duration, the more the portfolio's price will fluctuate when rates change.
How do I improve my balance score?To improve your score, rebalance the weights of your segments closer to an even split (e.g., 33.3% across three rungs) to minimize concentration in any single maturity period.
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