Alina Khay

Alina Khay

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Alina Khay
Alina Khay
Mathematics of Enhanced Portfolio Returns
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Mathematics of Enhanced Portfolio Returns

In the financial world, Harry Markowitz's Modern Portfolio Theory has long been regarded as the gold standard for optimizing investment portfolios.

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Alina Khay
Aug 25, 2024
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Alina Khay
Alina Khay
Mathematics of Enhanced Portfolio Returns
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In the financial world, Harry Markowitz's Modern Portfolio Theory has long been regarded as the gold standard for optimizing investment portfolios. MPT’s core principle—that diversification across assets with low correlations can yield higher returns with reduced overall risk—remains foundational. By strategically allocating assets such as real estate, private equity, and hedge funds, which demonstrate disparate correlations to traditional stocks and bonds, institutional investors have historically pursued the elusive balance of maximizing returns while minimizing risk. However, while MPT provides a robust framework, emerging theories suggest that further enhancing portfolio performance might be possible through more nuanced and mathematical approaches.

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