New answers tagged portfolio-management
0
Either or both assets have are "risk-free" (in the sense of zero volatility, or guaranteed short-term returns). One could then build a portfolio using it/these, ignoring risky assets.
If the assets are perfectly correlated, or perfectly negatively correlated, AND you have confidence in their volatilities, then one could construct a zero vol ...
2
Risk-free assets refer to assets with a definite rate of return and no risk of default. From the perspective of mathematical statistics, risk-free assets refer to assets with zero variance or standard deviation of investment returns. Of course, the covariance and correlation coefficient between the rate of return of risk-free assets and the rate of return ...
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Let's say the amount invested on December 31, 2020 is 1 dollar (you can think of 1 million dollars if you prefer). This is the initial portfolio value.
The initial weights are [0.5 0.5] by your example. This means the dollar amounts invested are also [0.5 0.5].
Day 1
Stock 1 has a 1% return and Stock 2 has a 2% return. Therefore the dollar values are now [0....
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