How to calculate the weighted average from three stocks

Question

I am trying to 'calculate the weighted return for my portfolio assuming assuming an equal number of shares for each stock'. I am looking at three stocks.

I combined all three stocks as so:

my_portfolio = pd.concat([appl_df, cost_df, goog_df], axis='columns', join='inner')
my_portfolio.columns = ['APPL', 'COST', 'GOOG']

my_portfolio_return = my_portfolio.sort_index()
my_portfolio_return.head()

Now I tried to set the weights as follow and then calculate my weighted portfolio; the only thing is I am not sure if I am using the correct syntax (dot).

# Set weights
weights = [1/3, 1/3, 1/3]

# Calculate portfolio return

weighted_portfolio = my_portfolio_return.dot(weights)
weighted_portfolio.sum
weighted_portfolio

Can anyone tell me what I'm doing wrong?

Answer 1

Try normalizing each of the three stocks to a maximum ceiling value like a percentage or something.