Effektivitetsgräns

Effektivitetsgräns, often translated as efficiency frontier or efficient frontier, is a concept primarily used in finance, particularly in portfolio theory. It represents the set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return. Any portfolio located on the efficiency frontier is considered "efficient" because it is not possible to increase the expected return without also increasing the risk, or to decrease the risk without also decreasing the expected return.

The construction of the efficiency frontier typically involves a mathematical optimization process. Investors or portfolio managers input the expected returns, volatilities (risk), and correlations of various assets. The optimization algorithm then identifies the specific weightings of these assets that form portfolios lying on the frontier. Portfolios that fall below the efficiency frontier are considered inefficient, as there exist other portfolios on the frontier that offer a better risk-return trade-off. Investors aim to select a portfolio on the efficiency frontier that aligns with their individual risk tolerance and return objectives. The shape of the efficiency frontier is generally curved, reflecting the benefits of diversification.