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Does financing a portfolio on margin affect the variance of a portfolio?
Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50.  On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But "you pay your money and you take your chances" (Punch, 1846).