> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fincept.in/llms.txt
> Use this file to discover all available pages before exploring further.

# Hierarchical risk parity

> Hierarchical risk parity: cluster the assets by correlation distance (single, complete, average, weighted, centroid, median or Ward linkage), order them along the tree and split risk by recursive bisection; returns the weights, performance, linkage, dendrogram and clustered correlation heatmap.

Toolset `pfopt_hrp`: 1 tool.

| Tool | What it does | Notes |
| - | - | - |
| `pfopt_hrp` | Hierarchical risk parity weights from a price (or returns) history, or from a covariance matrix alone: the assets are clustered by correlation distance, ordered along the tree and risk is split between sub-clusters by inverse variance, needing no expected returns and no matrix inversion. | |

Inputs, limits and outputs are described in [Fincept Portfolio Optimizer](/guides/fincept-portfolio-optimizer). Full schemas: `fincept_describe_tool`.


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.