Allocation
Shows what the portfolio is made of right now.
Allocation is the current mix of the portfolio: asset classes, cash and the largest positions by market value. It is the contents of the basket, not the history of how the basket got there.
The metric helps see concentration. It can show that most exposure sits in one stock, one asset class, one currency area, or that cash is a large part of the account.
There is no universal perfect allocation. A large slice simply means large exposure and needs context from the trader's goal and risk. Shorts are counted as exposure rather than subtracting from the pie, and allocation changes when market prices move.
Example: a portfolio has $6,000 in stocks, $2,000 in bonds and $2,000 in cash. Allocation is 60% stocks, 20% bonds and 20% cash. If there is also a -$1,000 short position, it adds $1,000 of exposure instead of reducing the total.
How we compute it
Open position market values are grouped by asset class using absolute value, so shorts add to exposure instead of reducing it. The denominator is the sum of absolute open-position market values plus positive cash; top positions keep their sign and a short badge.