How a portfolio is divided among asset types such as stocks, bonds or sukuk, and cash.
Example
Imagine two $50,000 portfolios: one is 80% stocks and 20% bonds, the other 40% stocks, 50% sukuk and 10% cash. If stocks fall 25% while everything else holds steady, the first loses $10,000 (20%) and the second $5,000 (10%). That split between asset types often does more than the choice of individual stocks to set how much a portfolio swings.
Hypothetical numbers, for illustration only.
Three stacked bars with green stocks and hatched gray bonds: start, $10,000 split $6,000 (60%) and $4,000 (40%); after a year, $12,000 split $8,400 (70%) and $3,600 (30%); rebalanced, $12,000 split $7,200 (60%) and $4,800 (40%). Between the last two, notes read sell stocks $1,200 and buy bonds $1,200, and a small note says example target, not a recommendation.