meanvarianceramverket
Mean-variance optimization is a fundamental concept in modern portfolio theory, developed by Harry Markowitz. It provides a framework for selecting the optimal portfolio of assets by considering both their expected returns and their variances (or standard deviations), which are measures of risk. The core idea is to maximize expected return for a given level of risk, or equivalently, minimize risk for a given level of expected return.
The framework involves plotting portfolios on a graph with expected return on the vertical axis and risk
Investors can then choose a portfolio from the efficient frontier based on their individual risk tolerance.
The mean-variance framework relies on estimates of expected returns, variances, and covariances of the assets. The