Financial

Efficient frontier

Efficient frontier

The combinations of securities portfolios that maximize expected return for any level of expected risk, or that minimizes expected risk for any level of expected return. Pioneered by Harry Markowitz.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Markowitz Efficient Frontier

A graphical representation of the set of portfolios giving the highest level of expected return at different levels of risk. Harry Markowitz theorized that each level of risk contains one combination of assets giving the highest expected return. An efficient set of portfolios is represented as a line on a graph with risk as the x-axis and expected return as the y-axis; this representation is the Markowitz efficient frontier. See also: Markowitz Efficient Portfolio, Homogeneous Expectations Assumption.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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References in periodicals archive
"By using Connected Risk Intelligence, we can help clients identify the combination of solutions that move their overall risk finance portfolio to the Efficient Frontier and exploit arbitrage opportunities along the way...
This paper calculates the efficient frontier (EF) (1) and the capital market line (CML), using data from companies listed in PSI 20, considering two different periods: before and after the Global Financial Crisis.
Except, a limited few, most of them lie close to the efficient frontier as evident from the scores being close to one (i.e, 100 Percent efficiency).
Prior to Interana, George developed Efficient Frontier, a provider of optimizing multi-channel and auction-based digital advertising, which was acquired by Adobe in 2012.
According to our Efficient Frontier model, we found that Base Metals performed very well with respect to its risk profile for the period from Jan 2009 to Dec 2016 (fig 1).
For Insurers, Performance Measures Based on Efficient Frontier Analysis May Work Best
These tools are slightly improved versions of pioneering work in the 1950s and 1960s by Harry Markowitz (the efficient frontier), William Sharpe and others (the capital asset pricing model), and Myron Gordon (the dividend discount model for valuing a firm).
Figure 4 shows all the solutions k (mixtures) in the criteria space with a rotated view to make easier the visualization of the efficient frontier.
In the literature, Grist method tends to be used to define a normal vector on the efficient frontier. The Project method is introduced as one of the reference point methods.
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