How does portfolio allocation work in Fincanva?

In Fincanva, portfolio allocation defines how your total capital is distributed across the different models within your portfolio.
It is a critical factor that shapes your:

• Performance

• Diversification

• Risk exposure

Choosing the right allocation method allows you to align your portfolio with your investment goals — whether that's maximizing returns, controlling volatility, or balancing risk.

Available Allocation Methods

When building a portfolio, you select an allocation method that determines how capital flows into each model.
Fincanva offers a range of approaches, from simple to advanced:

1. Equal Weights

• Capital is split equally among all selected models.

• Simple, balanced starting point.

2. Fixed Weights

• You assign specific percentages to each model (e.g., 60% stocks, 40% bonds).

• Allows for precise control over your exposure.

3. Ranking-Based Allocation

• Models are ranked based on performance or other selected metrics.

• Higher-ranked models receive more capital.

• Useful for performance-driven strategies.

4. Risk Scaling

• Models with higher risk receive less capital.

• Helps control overall portfolio volatility.

5. Risk Parity

• Capital is distributed so that each model contributes equally to total portfolio risk.

• Seeks balance across risk sources, not just capital amounts.

6. MPT (Modern Portfolio Theory — Positive Weights Only)

• Optimizes the portfolio to maximize return for a given level of risk.

• Uses only positive weights, avoiding short positions.
• A data-driven approach rooted in financial theory.

Why Portfolio Allocation Matters

Each allocation method follows a different logic and can significantly impact:

• How diversified your portfolio is

• How much volatility you experience

• Your ability to achieve specific return or risk targets

Selecting the appropriate method ensures your portfolio’s behavior matches your investment objectives — whether that's growth, preservation, or risk balancing.