Transparency is a feature. This page explains what risk contribution measures and why we compute it — in plain terms. The precise formulas and numeric conventions are documented in our internal methodology; the summary here is deliberate, not an omission.
A portfolio's overall volatility is not just the sum of each holding's own volatility — because holdings move together (or against each other), risk pools in ways that aren't obvious from position sizes alone. Risk contribution answers "where is my risk actually coming from?" by splitting total portfolio volatility into one piece per asset. Thanks to a mathematical property of volatility (it scales cleanly with position size, which lets Euler's theorem apply), these pieces add back up to the total exactly — nothing is lost or double-counted. All three views below are the same decomposition scaled three different ways, and none of them annualize: they simply inherit whatever return frequency the risk inputs are expressed in.
This is the sensitivity view: for each asset, how much would total portfolio volatility move if you nudged that asset's weight up a little, leaving the others where they are. A larger positive number means adding to that position increases risk faster; a negative number flags a genuine hedge — a holding whose next dollar actually reduces portfolio volatility.
This is the allocation view: each asset's marginal sensitivity scaled by how much of it you actually hold, so the numbers are directly comparable and add back up to the total portfolio volatility. It tells you the absolute amount of risk each position is responsible for. Individual terms can be negative for a hedging asset; for a long-only book every piece is zero or positive.
This is the share view: the same allocation expressed as a fraction of total risk, so the pieces add up to 100%. It answers "what percent of my risk sits in this name?" — the most intuitive read for spotting concentration. A hedging position can show a negative share, in which case the remaining positions add up to more than 100% to compensate.
