...and to your other question: the minimum variance portfolio is just that, the optimal portfolios lie above it and to the right on the Efficient Frontier with higher returns and higher risks (these are varyingly optimal to different people who may like more risk and return until the risk free return is introduced which then creates a single tangency on the Frontier which is presumed to be the Market).
All dots (single securities) have some correlation with every dot. The extreme dots to the right are relevant but generally not desirable. The correlations and weighted portfolios to the left of the dots create the feasible set; the best of these are on the Efficient Frontier (up and to the left).
I have a question here Dr.C. Those colored dots at 1:34 that u r talking about,. Is every coloured dot correlated with the dot immediately below it?? I am asking you this question because u have said, the dots are correlated, but u havent mentioned correlated with what. and how about the black dots?? are they combination of these assets?
...and to your other question: the minimum variance portfolio is just that, the optimal portfolios lie above it and to the right on the Efficient Frontier with higher returns and higher risks (these are varyingly optimal to different people who may like more risk and return until the risk free return is introduced which then creates a single tangency on the Frontier which is presumed to be the Market).
drcinvests 3 years ago
All dots (single securities) have some correlation with every dot. The extreme dots to the right are relevant but generally not desirable. The correlations and weighted portfolios to the left of the dots create the feasible set; the best of these are on the Efficient Frontier (up and to the left).
ChuckJPC 3 years ago
I have a question here Dr.C. Those colored dots at 1:34 that u r talking about,. Is every coloured dot correlated with the dot immediately below it?? I am asking you this question because u have said, the dots are correlated, but u havent mentioned correlated with what. and how about the black dots?? are they combination of these assets?
iammdeepak1 3 years ago