All lessons
Rebalancing: weights change even when you do nothing
You bought a 60/40 mix. Is that still the mix you own?
Calculate allocation drift and distinguish token count from diversification.
Portfolio weight is an asset's current value divided by the total portfolio value. Prices changing at different rates move those weights even without a trade. A target allocation is a planning choice, not a universal prescription.
Rebalancing moves a portfolio toward a chosen target. A calendar rule or a predetermined drift threshold can make the decision repeatable. New contributions can sometimes change weights without selling, though that depends on circumstances.
Different ticker symbols do not guarantee independent risks. Tokens may share market direction, collateral, custody providers or protocol dependencies. Historical correlation changes with the sample period and can shift during stress.
A rebalance may sell an asset that keeps rising and buy one that keeps falling. Account for trading costs, liquidity and applicable tax consequences before implementation. A two-crypto example is only arithmetic, not a complete diversified financial plan.
Let’s work through it
- Value every holding in one currency at a consistent time.
- Calculate current weights and compare with a written target rule.
- Check shared risks, costs and feasibility before any rebalance.
Let’s use numbers · hypothetical example
A fictional paper portfolio starts with A worth 600 and B worth 400. A rises 50% to 900 while B stays 400: total 1,300. Weights are about 69.23% and 30.77%. A hypothetical return to 60/40 targets 780 and 520, requiring a 120 transfer from A to B before costs.
Easy mistakes to watch for
- Assuming purchase weights never drift.
- Counting tokens instead of shared risk factors.
- Treating past low correlation as a permanent hedge.
Keep in mind
The 60/40 split is an arbitrary teaching target, not a recommendation. Rebalancing does not remove market, custody or permanent-loss risk.
Your turn
Reduce both post-move assets by 30%. Check their weights and total loss; explain why holding two tokens did not prevent the common shock.
A quick check before we move on
How much moves from A to B in the no-cost example?
- 300
- 520
- 120
Check answer
120 The A target is 60% of 1,300 = 780; reducing A from 900 to 780 moves 120 to B.
Sources and further reading
- www.investor.gov/introduction-investing/getting-started/asset-allocation
- investor.vanguard.com/investor-resources-education/portfolio-management/diversifying-your-portfolio
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.