Markowitz Portfolio Theory

Markowitz Portfolio Theory, developed by Harry Markowitz, focuses on optimizing investment portfolios to achieve the best return for a given level of risk. The theory suggests that by diversifying investments across different assets, investors can reduce the overall risk while maximizing returns. It emphasizes the importance of considering how assets interact with each other, rather than just their individual performance. By analyzing expected returns, risk, and correlations between assets, investors can construct a balanced portfolio that aligns with their financial goals and risk tolerance, leading to more informed and strategic investment decisions.