Portfolio rebalancing: restore weights by transferring or contributing
Calculate drifted weights, the amount to transfer and the minimum new contribution without selling.
Rebalancing returns a portfolio to previously chosen weights. Here 60/40 is only a hypothetical arithmetic target, not a recommended allocation. Specify the structure being checked before seeing the result rather than selecting a convenient target afterwards.
Price changes alter the weights
Suppose hypothetical holdings A and B initially have values of 600 and 400 currency units. Later they are worth 720 and 380. Total value is now 1100; A weighs 720/1100=36/55≈65.4545%. Keeping the same quantities did not maintain the 60/40 mix.
Use one currency, simultaneous valuations, fractional units and fixed prices. The calculation excludes taxes and costs. These are example assumptions; actual lot sizes, fees, taxes and moving prices can change the quantities required.
Restore weights without changing the total
With total value 1100, target values are 660 for A and 440 for B. Transferring 60 from A to B produces exactly those amounts: 720−60=660 and 380+60=440. The total remains 1100.
This transfer measures a change in allocation, not profit. If actual selling and buying incurs costs, include them in the available amount first. Restoring weights alone guarantees neither smaller losses nor higher future returns.
Our own teaching example; all figures are hypothetical.
720 + 380 = 1100; 720/1100 = 36/55; 1100 × 0.6 = 660; 1100 × 0.4 = 440; C = 720/0.6 − 1100 = 100
| State | A | B | Total |
|---|---|---|---|
| Initially | 600 | 400 | 1000 |
| After price changes | 720 | 380 | 1100 |
| Transfer 60 | 660 | 440 | 1100 |
| Add 100 only to B | 720 | 480 | 1200 |
Restore weights using only a contribution
If A cannot be sold, solve for contribution C using 720/(1100+C)=0.6. This gives C=100, all allocated to B. Final values 720 and 480 sum to 1200 and restore 60/40.
First retain date, prices, current and target values, permitted actions and constraints in an external table. Elliott does not calculate or execute portfolio rebalancing. Studying an individual instrument’s price chart is a separate task covered by the first-calculation guide.
Can a contribution of only 50 restore 60/40 without sales from values of 720 and 380?
No. At total value 1150, target A is 690, requiring a negative contribution of −30 to A. The minimum contribution in this example is 100, entirely to B.
Sources
Sources checked: 2026-10-21
This material and its translations were prepared with AI assistance. Educational calculations were checked programmatically. Sources explain concepts; examples and files were created for this article.
Related reading
Next step
Keep the allocation calculation in an external table. To study one instrument’s chart separately, open the first-calculation review guide. The program does not calculate a target portfolio or send broker orders.
Separate task: review a price chart →