Markowitz Portfolio Theory

Mean-Variance Analysis of a Stock Portfolio

Maximising Expected returns for a given level of risk (volatility). The idea is to reduce risk by diversifying your stock portfolio.

Prerequisites

• Your choice in Stocks

that's pretty much it.

Math

• Expected Return $$ E(R_p) = ( \sum_{i}w_i*E(R_i)) $$
• Portfolio Variance σp^2 = ( \sum{i})(\sum_{j})w_iw_jσ_j*φ_j

Version 1

A four stock Portfolio, NVDA, TSLA, NFLX, GOOG

Sharpe Ratio

Version 2

9 Stock Portfolio

Correlation

Sharpe Ratio