Optimal Portfolio Construction Based on Markowitz Model

The appearance of Markowitz Model significantly improves the way investors optimize their financial portfolio, allowing them to reduce collective risks different assets and further maximize profitability portfolio. This article aims discuss analyze feasibility in practical cases as definition this mean variance model leans theoretical aspect finance like efficient market rational investors. data that applied study will be ten stocks from types companies a market-capitalization index S&P 500. By utilizing expected return standard deviation formula, frontiers, minimum frontiers max Sharpe portfolio are calculated respectively. Then simulating limitations through applying five distinct constraints on original results take glance at performance real cases. At last, discussing restrictions based evidence claimed by predecessor is necessary for demonstrating preciseness. comparing contrasting under ideal situation cases, it reaches conclusion do gain higher returns more optimized means Model.