doesn t take risk into account
based largely on historic dataexpected return examplethe expected return does not just apply to a single security or asset it can also be expanded to analyze a portfolio containing many investments if the expected return for each investment is known the portfolio s overall expected return is a weighted average of the expected returns of its components for example let s assume we have an investor interested in the tech sector their portfolio contains the following stocks with a total portfolio value of 1 million the weights of alphabet apple and amazon in the portfolio are 50 20 and 30 respectively thus the expected return of the total portfolio is 