Capital Allocation
Capital allocation is the deciding of how much of a trading account is committed to each strategy or instrument so that the whole book carries balanced, intended risk.
Capital allocation decides how much of an account each strategy or instrument gets, so the whole book carries balanced, intended risk. Equal rupees do not mean equal risk — volatility and, above all, correlation decide how sleeves combine, which is why volatility targeting and risk parity beat naive splits, and why reserves and per-sleeve caps matter on margined NSE derivatives. AlgoTradeGyan keeps the engineering view in the portfolio engine and risk engine pages; the portfolio-risk concept itself is maintained at its canonical home on RiskManagementGyan, the network's risk authority, alongside position sizing and diversification.
Go deeper on RiskManagementGyan
The network's canonical risk reference — formulas, worked examples and tools.
Portfolio risk
Canonical explainer on RiskManagementGyan.
Position sizing
Canonical explainer on RiskManagementGyan.
Diversification
Canonical explainer on RiskManagementGyan.
Related on AlgoTradeGyan: Position Sizing · Portfolio Heat · Portfolio Diversification · Risk per Trade · The Portfolio Engine · Maximum Drawdown
Published 10 July 2026 · Updated 17 July 2026. This page is a summary; the canonical, maintained treatment of Portfolio risk lives on RiskManagementGyan. Educational content only — not investment advice.