How Rebalancing Affects Return

Rebalancing is the discipline of mechanically buying and selling to bring a portfolio that's drifted from its target allocation back to its original risk design. It sells off some of what's risen a lot and tops up what's lagged, which has the effect of automatically selling high and buying low without emotion getting involved. This calculator takes your current holdings and target allocation and computes the trade amounts needed.

For a comparison of quarterly vs. annual cycles, band (drift-tolerance) rebalancing, and how to account for trading costs and taxes, see the complete guide to portfolio rebalancing.

Worked Example

Example (an illustrative portfolio — not a recommendation to trade any specific stock): say your domestic-stock category holds 100 shares of Samsung Electronics (70,000 won each, 7,000,000 won total), and your overseas-stock category holds 10 shares of SPY ($217.39 each, about 3,000,000 won at a 1,380 won/dollar rate) — a 10,000,000-won total portfolio currently split 70% domestic / 30% overseas. Setting a 50/50 target means selling about 2,000,000 won of domestic stock and buying about 2,000,000 won of overseas stock. That works out to selling 28 shares of Samsung Electronics (1,000 won commission) and buying 6 shares of SPY (11,000 won combined commission and FX spread), for 12,000 won in total trading cost. The concentration index (HHI) drops from 58.0 to 50.0, a diversification gain of 8.0.

What's Included and Excluded

Included: converting all holdings to won (USD positions use the exchange rate at lookup time), computing trade amounts from the gap between each category's current and target weight, applying a trading commission (0.05% default) and, for overseas stocks, an FX spread (0.5% default), capping sell quantity at what you actually hold, and comparing the concentration index (HHI) before and after.
Excluded: when a category holds more than one asset, the trade amount is split evenly by count rather than by market cap or existing weight, so the actual per-asset split can differ from what you might expect; capital-gains tax on sales (use the capital-gains tax calculator separately); leftover amounts smaller than one whole share; and band-based (drift-tolerance) partial rebalancing.

Reading the Result

The buy/sell quantities shown are a calculation aimed at reaching your target weights; the actual fill price can differ from the price used here, so trading exactly that quantity may not land you precisely on target. A lower HHI means less concentration across categories — it does not by itself mean higher expected return or lower risk of loss. An asset marked "HOLD" simply means its gap from target is under 1,000 won, too small to be worth trading.

Out-of-Range Inputs

If your target weights sum to more than ±2 percentage points away from 100%, you'll see "Target weights do not sum to 100%: XX%." If your total holdings value is 0 or less, you'll see "Total asset value is 0." If a price lookup fails for one of your assets, you may see "Could not fetch price for {ticker}."

Assumptions and Limits

USD prices and the exchange rate are looked up at request time, but fall back to a reference fixed rate (1,380 won/dollar) if that lookup fails, which can differ from your actual trade-time rate. Trade amounts within a category are split evenly across its assets regardless of size, so results can diverge from your intended split when asset counts or sizes vary widely. This calculator does not execute any trades — its results are a reference calculation only.