Day 26 of 30 · 13 min

Review portfolio risk, allocation and concentration

By the end of this lesson you can

Read your portfolio’s risk numbers
Spot concentration that crept in
Decide whether to rebalance

What to look at

Check the largest single holding, the largest sector, how much is in cash, and the portfolio’s drawdown so far. VEXA’s grade for the paper portfolio explains each category it scores.

Drift

Winners grow and losers shrink, so weights drift away from your plan. A stock that started at 10% can become 20% after a strong run. That is not automatically wrong, but it is a bigger bet than you chose.

Rebalance on purpose

Rebalancing trims positions that exceed your limits. In a real account it can trigger taxes and costs, so many people rebalance on a schedule or only when a limit is breached.

Try it in VEXA

Grade a portfolio →

Real data, so the numbers will differ from the lesson’s examples.

Key terms

Drift: The gradual change in portfolio weights as prices move.
Cash drag: Lower returns from holding a large share of uninvested cash in a rising market.

Full glossary →

Paper Challenge task

Read the grade and diversification notes, and record in your journal whether any holding breaks your rules.

Open the Paper Challenge

Simulated trading with virtual money on real end-of-day prices. Nothing is bought or sold for real, and results in a game do not predict real-world results.

Try it

Write one journal entry describing your largest risk right now and what, if anything, you will change.

Key takeaways

Check largest holding, largest sector, cash and drawdown.
Winners drift into bigger bets.
Rebalance deliberately, not constantly.