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Ok I feel like this has to have a simple solution but I can't for the life of me figure it out. I have a given weighted average, let's say total returns of a portfolio. And I want to break that out into returns from equity and returns from bonds. I know the returns of each and my total return, but I don't know how to calculate what weights I had in each.

I know I can use goal seek in Excel to get the answer, but there has to be some calculation I can use.

Ex: Total Return (weighted average of stocks and bonds) = 3.48%, Stock Returns = 5.21%, Bond Returns = 0.59%

Kendrix
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  • I'm voting to close this question as off-topic because it is about finance / mathematics instead of programming or software development. – Pang Nov 05 '18 at 03:06

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If i understand well your question, you want to know how to calculate that the weight of the stock portfolio is 1.67 the weight of the Bond Portfolio.

1.0059 bond + 1.0521 stock = 1.0348 ( bond + stock ) and stock = w * bond

after replacing stock by w*bond on the first equation, and isolating w , you can find that the initial portfolio contains 1.67 stocks for 1 bond. Hope it helps.

Arthur Vandergood
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