Library term·Portfolio & valuation
Modern Portfolio Theory (Markowitz) & Optimal Risk Distribution
Mean–variance optimisation: portfolios on the efficient frontier maximise return per unit of risk given expected returns and covariances.
Authored by·Editorially reviewed
Onur Erkan YıldızFounder, Financial Engineer · CMB-licensed
Higher education in Financial Engineering and Money & Capital Markets. SPK (Turkey CMB) licence. 16 years across institutional markets, research, and quant-driven analytics.
Overview
Markowitz (1952) formalises diversification: combine assets with imperfect correlation so portfolio variance falls faster than linear averages. The efficient frontier contains non-dominated portfolios. Inputs — means, covariances — dominate output quality.Practical takeaway
Practitioners often blend MPT with risk parity, factor models, or Black–Litterman to stabilise weights. Never trust a single-point optimiser without stress tests.How this connects to Finvestopia
When you read our composite quality on Radar, think in risk buckets: independent macro and micro drivers matter as much as counting more symbols.Related entries
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Educational content authored by our team — informational only, not investment advice.